Execution Copy: August 1, 2013

ASSET PURCHASE AGREEMENT

ASSET PURCHASE AGREEMENT (“ Agreement ”), dated August 1, 2013 (the “ Effective Date ”), between Mikah Pharma LLC a limited liability company organized under the laws of the State of Delaware ( “ Seller ”) and Elite Laboratories, Inc. , a corporation incorporated under the laws of the State of Delaware (“ Buyer ”). Buyer and Seller are each “Party” to this Agreement and together constitute the “Parties”.

Background

Seller owns ANDAs that it acquired from Actavis, Inc. that was operating under a Consent Decree, a copy of which was provided to Buyer, which may subject the ANDAs (as defined below) to additional scrutiny before FDA permits the Products (as defined below) to be manufactured elsewhere. Nevertheless, on the terms and conditions set forth in this Agreement and the Consent Decree, Buyer wishes to purchase from Seller and Seller wishes to sell to Buyer, the ANDAs.

NOW, THEREFORE , in consideration of the mutual covenants herein contained and for other good and valuable consideration the receipt and adequacy of which are hereby acknowledged, the Parties hereby agree as follows:

Article 1

DEFINITIONS

Section 1.1                   Definitions

All terms not defined below are defined elsewhere in this Agreement.

“ Affiliate ” means any Person that directly or indirectly Controls, is Controlled by or is under common Control with another Person. A Person will be deemed to “ Control ” another Person if it has the power to direct or cause the direction of the other Person, whether through ownership of securities, by contract or otherwise.

“ Agency ” means any governmental regulatory authority or authorities in the United States responsible for granting approval(s), clearance(s), qualification(s), license(s) or permit(s) for any aspect of the research, development, manufacture, marketing, distribution or sale of a Product. The term “Agency” includes, but is not limited to, the FDA and the United States Drug Enforcement Administration.

“ ANDA(s) ” means Abbreviated New Drug Applications listed in Schedule 1 and all amendments thereto, that have to date been filed with the FDA seeking authorization and approval to manufacture, package, ship and sell, as more fully defined in 21 C.F.R. Part 314, the Products.

{***} Confidential portions of this exhibit have been redacted and filed separately with the Commission pursuant to a confidential treatment request in accordance with Rule 24b-2 of the Securities Exchange Act of 1934, as amended.

“ ANDA Technology and Scientific Materials ” means any technological, scientific, chemical or biological materials, trade secrets, know-how, Intellectual Property, techniques, data, inventions, practices, methods and all other confidential and proprietary technical, research, development and other applicable business information (whether patented, patentable or otherwise) related to the manufacture, validation, packaging, release testing, stability and shelf life of the Product, including all Product formulations, in existence and in the possession of Seller as of the Closing Date.

“ Assumed Liabilities ” has the meaning set forth in Section 2.3.

“ Bill of Sale ” means a bill of sale to be delivered by Seller to Buyer effective on the Closing Date, substantially in the form of Exhibit A .

“ Business Day ” means any day other than a Saturday, Sunday or other day on which banks in New York, New York are permitted or required to close by law or regulation.

“ Buyer ” has the meaning set forth in the preamble.

“ Buyer Indemnified Parties ” has the meaning set forth in Section 8.2 .

Calendar Quarter ” means the three month period ending on the last day of each of March, June, September and December.

“ Closing ” and “ Closing Date ” have the meanings given such terms in Section 3.1 .

“ Development ” means all preclinical and clinical drug development activities, including test method development and stability testing, toxicology, bioequivalency, formulation, process development, manufacturing scale-up, development-stage manufacturing, quality assurance/quality control development, statistical analysis and report writing, conducting clinical trials for the purpose of obtaining any and all approvals, licenses, registrations or authorizations from any Agency necessary for the manufacture, use, storage, import, export, transport, promotion, marketing and sale of the Products, Product approval and registration, and regulatory affairs related to the foregoing. “ Develop ” means to engage in Development.

“ Effective Date ” has the meaning set forth in the preamble.

“ Encumbrance ” means any mortgage, charge, lien, security interest, easement, right of way, pledge or encumbrance of any nature whatsoever.

“ Excluded Liabilities ” has the meaning set forth in Section 2.3 .

“ FDA ” means the United States Food and Drug Administration.

“ Governmental Entity ” means any court, administrative agency, department or commission or other governmental authority or instrumentality, whether U.S. or non-U.S.

{***} Confidential portions of this exhibit have been redacted and filed separately with the Commission pursuant to a confidential treatment request in accordance with Rule 24b-2 of the Securities Exchange Act of 1934, as amended.

“ Governmental Rule ” means any law, judgment, order, decree, statute, ordinance, rule or regulation issued or promulgated by any Governmental Entity or Agency.

“ Intellectual Property ” has the meaning set forth in Section 4.7 .

“ Liabilities ” means any and all debts, liabilities and obligations, whether accrued or fixed, absolute or contingent, matured or unmatured, or determined or determinable, including those arising under any law, action or governmental order and those arising under any contract, agreement, arrangement, commitment or undertaking, or otherwise.

“ Losses ” means, collectively, any and all damages, losses, taxes, Liabilities, claims, judgments, penalties, costs and expenses (including reasonable legal fees and expenses).

“ Material Adverse Effect ” means an effect which is material and adverse to the Purchased Assets taken as a whole, but does not include: (i) any adverse effect due to changes in conditions generally affecting (A) the healthcare industry or (B) the United States economy as whole, (ii) any change or adverse effect caused by, or relating to, the announcement of this Agreement and the transactions contemplated by this Agreement or (iii) any adverse effect due to legal or regulatory changes.

“ Mutual Confidential Disclosure Agreement ” means the Mutual Confidential Disclosure Agreement entered into by the parties dated May 18, 2010.

“ Person ” means any individual, corporation, partnership, limited liability company, joint venture, trust, business association, organization, Governmental Entity or other entity.

“ Product(s) ” means the pharmaceutical or products now or hereafter described in the ANDAs.

“ Purchase Note ” has the meaning set forth in Section 2.1 .

“ Purchase Price ” has the meaning set forth in Section 2.1 .

“ Purchased Assets ” has the meaning set forth in Section 2.2 .

“ Security Agreement ” has the meaning set forth in Section 2.1 .

“ Territory ” means the United States and its territories, possessions, and commonwealths, including Puerto Rico.

“ United States ” or “ U.S .” or “ U.S.A .” means the United States of America.

Section 1.2                   Interpretation

When used in this Agreement the words “include”, “includes” and “including” will be deemed to be followed by the words “without limitation.” Any terms defined in the singular will have a comparable meaning when used in the plural, and vice-versa.

{***} Confidential portions of this exhibit have been redacted and filed separately with the Commission pursuant to a confidential treatment request in accordance with Rule 24b-2 of the Securities Exchange Act of 1934, as amended

Section 1.3                   Currency

All currency amounts referred to in this Agreement are in United States Dollars, unless otherwise specified.

Article 2

SALE AND PURCHASE OF ASSETS

Section 2.1                   Purchase and Sale

Upon the terms and subject to the conditions of this Agreement, on the Closing Date, upon payment of the $10,000,000 purchase price (the “ Purchase Price ”) in the form of a Senior Secured Convertible Promissory Note ( the “ Purchase Note ”), a copy of the form of which is attached hereto as Exhibit B , payment and performance of which by Buyer is secured in accordance with an ANDA Security Agreement in the form attached hereto as Exhibit C (the “ Security Agreement ”), and by this reference incorporated herein, Seller will sell, assign, transfer, convey and deliver to Buyer, and Buyer will purchase, acquire and accept, all right, title and interest, within the Territory, of Seller in, to and under the Purchased Assets.

Section 2.2                   Purchased Assets

The term “ Purchased Assets ” means the following properties, assets and rights of whatever kind and nature, tangible or intangible, of Seller existing on the Closing Date that relate solely and exclusively to the ANDAs and any testing, data, studies, and formulations created in connection therewith including but not limited to: (i) the ANDA s, (ii) any correspondence with the FDA in Seller’s files with respect to the ANDAs, (iii) the right of reference to the Drug Master Files, as set forth in the ANDAs; (iv) the ANDA Technology and Scientific Materials; (v) all rights to manufacture, sell or otherwise exploit any products resulting therefrom including all rights to revenues generated therefrom; and (vi) a royalty free limited license to use any ANDA Technology and Scientific Materials which is common to the Product and any other product of Seller, but only for Buyer’s use in connection with the manufacture of any Product.

Section 2.3             Assumption of Certain Liabilities and Obligations

From and after the Closing, Buyer will assume, be responsible for and pay, perform and discharge when due only those Liabilities in connection with the Purchased Assets, the use thereof and the later sale of any Product by Buyer arising from and after the Closing Date and only with respect to events, conditions, actions or circumstances first arising after the Closing Date, including but not limited to (i) Liabilities arising from any patent or trademark infringement claim or lawsuit brought by any Third Party, (ii) any product liability claim, and (iii) Liabilities arising from FDA or any other Governmental Entity action or notification after the Closing Date (collectively, the “ Assumed Liabilities ”). Notwithstanding the foregoing, Buyer will not assume or be liable for any Liabilities arising in connection with the Product and the Purchased Assets manufactured prior to the Closing Date, including Liabilities resulting from Third Party agreements of Seller or its Affiliates and Third Party claims arising out of acts or omissions of Seller prior to Closing Date (collectively, the “ Excluded Liabilities ”).

{***} Confidential portions of this exhibit have been redacted and filed separately with the Commission pursuant to a confidential treatment request in accordance with Rule 24b-2 of the Securities Exchange Act of 1934, as amended

Article 3

CLOSING

Section 3.1                   Closing Date

The closing of the sale and transfer of the Purchased Assets (the “ Closing ”) will take place at the offices of either Buyer or Seller or by fax, electronic delivery or mail, or other place as mutually agreed to by the Parties. The Closing shall take place on the Effective Date or first Business Day following the execution of this Agreement; provided , however , all of the conditions to each Party’s obligations under this Article have been satisfied or waived, or at such other time and date as will be mutually agreed to by the Parties hereto (such date of the Closing being hereinafter referred to as the “ Closing Date ”).

Section 3.2                   Intentionally left blank.

Section 3.3                   Conditions to Obligations of Buyer

The obligation of Buyer to purchase the Purchased Assets from Seller is subject to the satisfaction on and as of the Closing of each of the following conditions, unless waived by Buyer:

(a)                 Representations . The representations and warranties of Seller set forth in this Agreement will be true and correct as of the Closing as though made on and as of the Closing, except to the extent such representations and warranties relate to an earlier date (in which case such representation and warranties will be true and correct as of such earlier date).

(b)                Performance of Obligations of Seller . Seller will have performed or complied in all material respects with all obligations, conditions and covenants required to be performed by it under this Agreement at or prior to the Closing.

(c)                 Closing Deliveries . Seller will have executed and delivered to Buyer, dated as of the Closing Date, the (i) Bill of Sale, and (ii) a “Transfer of Ownership” letter to the FDA, relating to each of the ANDAs, as prescribed in 21 CFR 314.72, and shall deliver to Buyer a certificate of the Secretary of State or other applicable Governmental Authority certifying the good standing of Seller in its jurisdiction of organization as of a date within seven days of the Closing Date.

(d)                ANDAs . As further described in Section 6.2 , Seller will deliver the ANDAs to Buyer.

(e)                 No Government Rule enacted, entered, promulgated, enforced or issued by any Governmental Entity, Agency, or other legal restraint or prohibition shall be pending, threatened or in effect, which would (i) prevent consummation of any of the transactions contemplated by this Agreement, (ii) cause any of the transactions contemplated by this Agreement to be rescinded following consummation or (iii) affect adversely the right of Purchaser to own or exploit the Purchased Assets.

{***} Confidential portions of this exhibit have been redacted and filed separately with the Commission pursuant to a confidential treatment request in accordance with Rule 24b-2 of the Securities Exchange Act of 1934, as amended.

Section 3.4                   Conditions to the Obligations of Seller

The obligations of Seller to sell, assign, convey, and deliver the Purchased Assets, or to cause the Purchased Assets to be sold, assigned, conveyed or delivered, as applicable, to Buyer are subject to the satisfaction on and as of the Closing of each of the following conditions, unless waived by the Seller:

(a)                 Representations and Warranties . The representations and warranties of Buyer set forth in this Agreement will be true and correct in all material respects as of the Closing as though made on and as of the Closing, except: (i) to the extent such representations and warranties expressly relate to an earlier date (in which case such representations and warranties will be true and correct as of such earlier date) and (ii) for breaches of representations and warranties as to matters that individually or in the aggregate would not materially interfere with Buyer’s performance of its obligations hereunder; and

(b)                Closing Deliveries . Buyer shall have delivered to Seller, (i) an original executed copy of the Purchase Note and Security Agreement, and (ii) a certificate of the Secretary of State or other applicable Governmental Authority certifying the good standing of Buyer in its jurisdiction of organization as of a date within seven days of the Closing Date.

Article 4

REPRESENTATIONS AND WARRANTIES OF SELLER

As of each of the Effective Date and Closing Date, Seller hereby represents and warrants to Buyer as follows:

Section 4.1                   Seller Organization; Good Standing; Business

Seller is a limited liability company, duly organized, validity existing and in good standing under the laws of the State of Delaware. Seller has the requisite power and authority to own the Purchased Assets and to carry on its business as currently conducted. Seller is duly qualified to conduct business as a foreign limited liability company and is in good standing in each jurisdiction where the nature of the business conducted by it makes such qualification necessary, except where the failure to do so qualify or be in good standing would not have a Material Adverse Effect. Seller, in the ordinary course of its business, regularly acquires and sells ANDAs.

Section 4.2                   Authority; Execution and Delivery

Seller has the requisite limited liability company power and authority to enter into this Agreement and to consummate the transaction contemplated. The execution and delivery of this Agreement by Seller and the consummation of the transactions contemplated have been validly authorized. This Agreement has been executed and delivered by Seller and, assuming the due authorization, execution and delivery of this Agreement by Buyer, will constitute the legal and binding obligation of Seller, enforceable against it in accordance with its terms, subject to applicable bankruptcy, insolvency, reorganization, moratorium, fraudulent transfer and other similar laws affecting creditors’ rights generally from time to time in effect and to general principles of equity (including concepts of materiality, reasonableness, good faith and fair dealing) regardless of whether considered in a proceeding in equity or at law.

{***} Confidential portions of this exhibit have been redacted and filed separately with the Commission pursuant to a confidential treatment request in accordance with Rule 24b-2 of the Securities Exchange Act of 1934, as amended

Section 4.3                   Consents; No Violation, Etc.

The execution and delivery of this Agreement do not, and the consummation of the transactions contemplated hereby and the compliance with the terms hereof will not: (i) violate any Governmental Rule applicable to Seller, (ii) conflict with any provision of the certificate of incorporation or by-laws or certificate of formation or operating agreement (or similar organizational document) of Seller, (iii) result in a violation or breach of, or constitute (with or without due notice or lapse of time or both) a default (or give rise to any right of termination, cancellation or acceleration) under, or result in the creation of any Encumbrance upon any of the Purchased Assets (other than those imposed by the Security Agreement) under any of the terms, conditions or provisions of, any contract, agreement, plan, understanding, undertaking, commitment or arrangement, whether written or oral, any note, bond, mortgage, indenture, lease, license, deed of trust, loan, or other agreement, instrument or obligation to which Seller is a party or by which Seller or any of the Purchased Assets may be bound, (iv) to the knowledge of Seller, violate any rights of any non-party, or (v) require any approval, authorization, consent, license, exemption, filing or registration with any court, arbitrator or Governmental Entity, except, with respect to the foregoing clauses (i) and (iii), for such violations or conflicts which would not have a Material Adverse Effect or materially interfere with Seller’s performance of its obligations hereunder or, with respect to the foregoing clause (v), for such approvals, authorizations, consents, licenses, exemptions, filings or registrations which have been obtained or made or which, if not obtained or made, would not have a Material Adverse Effect or interfere with Seller’s performance of its obligations hereunder.

Section 4.4                   Litigation

To the knowledge of Seller, there are no claims, suits, actions or other proceedings pending or threatened in writing against Seller at law or in equity before or by any Governmental Entity or Agency, including but not limited to federal, state, municipal or other governmental department, commission, board bureau, agency or instrumentality, domestic or foreign, which may in any way materially adversely affect the performance of Seller’s obligations under this Agreement or the transactions contemplated hereby. There are no outstanding claims, suits, actions, judgments, orders, injunctions, decrees or awards against Seller in connection with the Purchased Assets, this Agreement or the transactions contemplated hereby that have not been satisfied in all material respects.

Section 4.5                   Title to Purchased Assets; AS IS

Seller has good and valid title to all of the Purchased Assets, as the case may be, free and clear of all Encumbrances. Buyer agrees that it is purchasing and will take possession of the Purchased Assets in their AS IS condition and that Buyer has been given the opportunity to conduct such investigations and inspections of the Purchased Assets as it deems necessary or appropriate.

{***} Confidential portions of this exhibit have been redacted and filed separately with the Commission pursuant to a confidential treatment request in accordance with Rule 24b-2 of the Securities Exchange Act of 1934, as amended

Section 4.6                   Purchased Assets AS IS

SELLER DOES NOT MAKE ANY REPRESENTATIONS OR WARRANTIES THAT THE FDA WILL APPROVE ANY FILINGS FOR OR RELATED TO THE ANDAS TRANSFERRED HEREUNDER OR THAT BUYER WILL EVER BE ABLE TO PRODUCE A COMMERICALLY SALEABLE PRODUCT AS TO THE ANDAS. SELLER FURTHER MAKES NO REPRESENTATIONS AS TO THE ADEQUACY OR COMPLETENESS OF THE FORMULATION OR OTHER DATA UNDERLYING THE ANDAS AND FURTHER MAKES NO REPRESENTATION AS TO THE REGULATORY SUFFICIENCY OF THE ANDAS.

Section 4.7                   Intellectual Property.

Seller owns or possesses adequate and enforceable licenses or other rights to use all “Intellectual Property” as defined below, is not in default under any such licensing or similar agreement and has not received any notice or has knowledge of conflict with or infringement (or alleged infringement) of any rights of others. Seller has no notice or knowledge that any of the Intellectual Property is being infringed upon or appropriated by any third party. The use of any Intellectual Property and other technical or proprietary data related to the Purchased Assets has not required and does not require the payment of any royalty or similar payment to any person, firm or corporation, and, immediately following the Closing, Buyer will have good and marketable title thereto, free and clear of any Encumbrances. “ Intellectual Property ” means all inventions, improvements, patents, utility models, designs, trade names, trade dress, trade secrets, trademarks, service marks, copyrights, know-how and other proprietary rights (including all grants, registrations or applications therefor), and all goodwill associated therewith, relating to the Purchased Assets or necessary for exploitation of the Purchased Assets, including, without limitation, any trade name, trademark or service mark.

Section 4.8                   Full Disclosure

No representation or warranty of Seller in this Agreement (including the Schedules attached hereto) and no statement of Seller contained in any document or certificate contemplated by this Agreement, considered as a whole with all other representations, warranties and statements, contains or will contain any untrue statement of material fact or omits or will omit to state any material fact necessary, in light of the circumstances under which it was made, in order to make the statements herein or therein not misleading.

Section 4.9                   Exclusive Representations and Warranties

Other than the representations and warranties set forth in this Article 4 VI, Seller is not making any other representations or warranties, express or implied, with respect to the Purchased Assets.

Article 5

 
REPRESENTATIONS OF BUYER

As of each of the Effective Date and Closing Date, Buyer hereby represents and warrants to Seller as follows:

{***} Confidential portions of this exhibit have been redacted and filed separately with the Commission pursuant to a confidential treatment request in accordance with Rule 24b-2 of the Securities Exchange Act of 1934, as amended.

Section 5.1                   Buyer’s Organization; Good Standing

Buyer is a corporation duly organized, validly existing and in good standing under the laws of the State of Delaware. Buyer is not in arrears of any taxes and is not under investigation by any Governmental Entity. Buyer has requisite corporate power and authority to carry on its business as it is currently being conducted. Buyer is qualified to conduct business as a foreign corporation and is in good standing in every jurisdiction where the nature of the business conducted by it makes such qualification necessary, except where the failure to so qualify or be in good standing would not prevent or materially delay the consummation of the transactions contemplated hereby.

Section 5.2                   Authority; Execution and Delivery

Buyer has the corporate power and authority to enter into this Agreement and to consummate the transactions contemplated hereby. The execution and delivery of this Agreement by Buyer and the consummation of the transactions contemplated hereby have been authorized. This Agreement has been executed and delivered by Buyer and, assuming the due authorization, execution and delivery of this Agreement by Seller, constitutes the legal and binding obligation of Buyer, enforceable against Buyer in accordance with its terms, subject to applicable bankruptcy, insolvency, reorganization, moratorium, fraudulent transfer and other similar laws affecting creditors’ rights generally from time to time in effect and to general principles of equity (including concepts of materiality, reasonableness, good faith and fair dealing regardless) of whether considered in a proceeding in equity or at law.

Section 5.3                   Consents; Notices; No Violations, Etc.

The execution and delivery of this Agreement do not, and the consummation of the transactions contemplated hereby and the compliance with the terms hereof will not: (i) violate any Governmental Rule, (ii) conflict with any provision of the certificate of incorporation or by-laws of Buyer, (iii) result in a violation or breach of, or constitute (with or without due notice or lapse of time or both) a default (or give rise to any right of termination, cancellation or acceleration) under, or result in the creation of any Encumbrance upon any of the Purchased Assets (other than those imposed by the Security Agreement) under any of the terms, conditions or provisions of, any contract, agreement, plan, understanding, undertaking, commitment or arrangement, whether written or oral, any, note, bond, mortgage, indenture, lease, license, deed of trust, loan, or other agreement, instrument or obligation to which Buyer is a party or (iv) require any approval, authorization, consent, license, exemption, filing or registration with any court, arbitrator or Governmental Entity, except with respect to the foregoing clauses (i) and (iii), for such violations or conflicts which would not materially interfere with Buyer’s performance of its obligations hereunder or, with respect to the foregoing clause (iv), for such approvals, authorizations, consents, licenses, exemptions, filings or registrations which have been obtained or made or which, if not obtained or made, would not materially interfere with Buyer’s performance of its obligations hereunder.

Section 5.4                   Litigation

As of the date hereof, there is no suit, claim, action, investigation or proceeding pending or, to the knowledge of Buyer, threatened against Buyer or any of its Affiliates which if adversely determined would delay the ability of Buyer to perform any of its obligations hereunder.

{***} Confidential portions of this exhibit have been redacted and filed separately with the Commission pursuant to a confidential treatment request in accordance with Rule 24b-2 of the Securities Exchange Act of 1934, as amended

Section 5.5                   Status of ANDAs

Buyer has reviewed each of the ANDAs, recognizes that they may be subject to additional scrutiny by the FDA as a result of the Consent Decree, and recognizes and assumes all risks and costs directly or indirectly associated with the ANDAs, obtaining FDA approval to transfer the manufacturing site for the ANDAs and the Products.

Section 5.6                   Assumption of Regulatory Commitments

From and after the Closing Date, Buyer will assume control of and responsibility for all costs, obligations and Liabilities arising from or related to, any commitments or obligations to any Governmental Entity involving the ANDAs and any of the other Purchased Assets.

Article 6

OTHER AGREEMENTS

Section 6.1                   Confidentiality

The parties agree that the exchange of confidential information and materials relating to the Purchased Assets and the terms and conditions contained in this Agreement shall be governed by the Mutual Confidential Disclosure Agreement, which is hereby incorporated herein by reference in its entirety.  The term of the Mutual Confidential Disclosure Agreement is hereby extended by the parties for five (5) years beyond the term of the Agreement. 

Section 6.2                   Transfer of ANDAs and Technology Transfer Assistance

For a period of 30 days from and after the Closing Date, Seller will cooperate with Buyer in disclosing and copying any relevant records and reports which are required to be made, maintained and reported pursuant to Governmental Rules in the Territory with respect to the ANDA that is a part of the Purchased Assets, including ANDA documents, marketing and regulatory authorizations and a tech-transfer package containing analytical methods, master batch records, validation reports, Annual Product Reports, finished product and raw material specifications, and retain samples, in each case to the extent they are available. The Parties will make reasonable efforts to recover any missing regulatory documents (original ANDA and any amendments or supplements thereto) from FDA and to take any other actions required by the FDA to effect the transactions contemplated herein.

Section 6.3                   Intentionally left blank.

Section 6.4                   Further Action; Consents; Filings

Upon the terms and subject to the conditions hereof, Seller and Buyer will use their respective reasonable efforts to: (i) take, or cause to be taken, all actions necessary and proper under applicable Governmental Rules or otherwise to satisfy the conditions to ClosingXI and consummate and make effective the transactions contemplated by this Agreement, (ii) obtain from the requisite Governmental Entities any consents, licenses, permits, waivers, approvals, authorizations or orders required to be obtained or made in connection with the authorization, execution and delivery of this Agreement and the consummation of the transactions contemplated by this Agreement, and (iii) make all necessary filings, and thereafter make any other advisable submissions, with respect to this Agreement and the transactions contemplated by this Agreement required under any applicable Governmental Rules. The parties will cooperate with each other in connection with the making of all filings, including by providing all such non-confidential documents to the other party hereto and its advisors prior to filing and, if requested, by accepting all reasonable additions, deletions or changes suggested in connection therewith. Seller and Buyer will furnish all information required for any application or other filing to be made pursuant to the rules and regulations of any applicable Governmental Rules in connection with the transactions contemplated by this Agreement.

{***} Confidential portions of this exhibit have been redacted and filed separately with the Commission pursuant to a confidential treatment request in accordance with Rule 24b-2 of the Securities Exchange Act of 1934, as amended

Article 7

TERMINATION AMENDMENT AND WAIVER

Section 7.1                   Termination

(a) This Agreement may be terminated and the transactions contemplated hereby abandoned at any time prior to the Closing:

provided, the party seeking termination pursuant to clause (ii) or (iii) is not in breach of any of its representations, warranties, covenants or agreements contained in this Agreement.

(b) In the event of termination of this Agreement by either party pursuant to this Section, written notice thereof will be given to the other party and the transactions contemplated by this Agreement will be terminated, without further action by either party. If this Agreement is terminated as provided herein:

{***} Confidential portions of this exhibit have been redacted and filed separately with the Commission pursuant to a confidential treatment request in accordance with Rule 24b-2 of the Securities Exchange Act of 1934, as amended

Section 7.2                   Amendments and Waivers

This Agreement may not be amended except by an instrument in writing signed by both parties hereto. By an instrument in writing, Buyer, on the one hand, or Seller, on the other hand, may waive compliance by the other party with any term or provision of this Agreement that such other party was or is obligated to comply with perform.

Article 8

INDEMNIFICATION

Section 8.1                   Survival

All representations and warranties of Seller and Buyer contained herein or made pursuant hereto will survive the Closing Date for an indefinite period or until such time as Buyer and Seller shall mutually agree in writing. The covenants and agreements of the parties hereto contained in this Agreement will survive and remain in full force for the applicable periods described herein or, if no such period is specified, indefinitely. Any right of indemnification pursuant to this ArticleXIII with respect to a claimed breach of a representation, warranty, covenant, agreement or obligation shall expire only upon written release by the party whom such representation, warranty, covenant, agreement or obligation is owed. The provisions of this Section 8.1 13.1 will survive for so long as any other Section of this Agreement will survive.

Section 8.2                   Indemnification

(a) Seller Indemnification . Seller hereby agrees to indemnify and defend Buyer and its Affiliates, and their respective officers, directors and employees (the “ Buyer Indemnified Parties ”) against, and agrees to hold them harmless from, any Losses to the extent such Losses arise from or in connection with the following:

(i) breach or alleged breach by Seller and/or any of its Affiliates or successors in interest thereto of any representation or warranty made by it contained in this Agreement;

(ii) any breach or alleged breach by Seller and/or any of its Affiliates or successors in interest thereto of any of its covenants, agreements or obligations contained in this Agreement; or

(iii) events, conditions actions or circumstances arising prior to the Closing;

provided, that Seller’s aggregate liability in respect of all Losses suffered or incurred by Buyer Indemnified Parties shall not exceed, and Seller will have no obligation to compensate any Buyer Indemnified Party for Losses in excess of, an aggregate amount equal to the Purchase Price. Seller may satisfy any obligation hereunder to compensate Buyer Indemnified Parties by a reduction in the unpaid balance of the Purchase Note; and, if the amount of such Losses exceeds the unpaid portion of the Purchase Note, then, to the extent that any portion of the Purchase Price or the payments due on the Purchase Note have been paid in the form of shares of stock in Buyer, Seller may pay such excess Losses with shares of common stock in Buyer. If Seller elects to use common stock in Buyer to compensate the excess Losses suffered or incurred by the Buyer Indemnified Parties, then the value of each share shall be the average closing price of a share of Buyer’s common stock on the principal trading market on which such shares are then trading for the 10 trading days immediately preceding the date on which the shares are delivered in payment.

{***} Confidential portions of this exhibit have been redacted and filed separately with the Commission pursuant to a confidential treatment request in accordance with Rule 24b-2 of the Securities Exchange Act of 1934, as amended.

(b) Buyer Indemnification . Buyer hereby agrees to indemnify and defend Seller and its Affiliates and related companies, and their respective officers, directors and employees (the “ Seller Indemnified Parties ”) against, and agrees to hold them harmless from, any Losses to the extent such Losses arise from or in connection with the following:

(i) any breach or alleged breach by Buyer and/or any of its Affiliates or successors in interest of any representation or warranty made by it contained in this Agreement;

(ii) any breach or alleged breach by Buyer and/or any of its Affiliates or successors in interest of any of its covenants, agreements or obligations contained in this Agreement; or

(iii) any and all liability in connection with the use and sale of the Product(s) by Buyer or the ANDAs

provided, that Buyer’s aggregate liability in respect of all Losses suffered or incurred by Seller Indemnified Parties shall not exceed, and Buyer will have no obligation to compensate any Seller Indemnified Party for Losses in excess of, an aggregate amount equal to the Purchase Price.

Section 8.3                   Procedure

(a)                 In order for an Indemnified Party under this Article 8XIII (an “ Indemnified Party ”) to be entitled to any indemnification provided for under this Agreement, the Indemnified Party will, within a reasonable period of time following the discovery of the matters giving rise to any Losses, notify its applicable insurer and the indemnifying party under this Article XIII8 (the “ Indemnifying Party ”) in writing of its claim for indemnification for such Losses, specifying in reasonable detail the nature of the Losses and the amount of the liability estimated to accrue therefrom; provided , however , that failure to give notification will not affect the indemnification provided hereunder, except to the extent the Indemnifying Party will have been actually prejudiced as a result of the failure. Thereafter, the Indemnified Party will deliver to the Indemnifying Party, within a reasonable period of time after the Indemnified Party’s receipt of such request, all information, records and documentation reasonably requested by the Indemnifying Party with respect to such Losses. The Indemnifying Party shall control all litigation reflecting to the indemnification. Without limiting the foregoing, the Indemnified Party shall control choice of counsel, staffing, and all decisions to be made with the litigation.

(b)          If the indemnification sought pursuant hereto involves a claim made by a non-party against the Indemnified Party (a “ Non-Party Claim ”), the Indemnifying Party will be entitled to participate in the defense of such Non-Party Claim and, if it so chooses, to assume the defense of such Non-Party Claim with counsel selected by the Indemnifying Party. Should the Indemnifying Party so elect to assume the defense of a Non-Party Claim, the Indemnifying Party will not be liable to the Indemnified Party for any legal expenses subsequently incurred by the Indemnified Party in connection with the defense thereof. If the Indemnifying Party assumes such defense, the Indemnifying Party will control such defense. The Indemnifying Party will be liable for the reasonable fees and expenses of counsel employed by the Indemnified Party for any period during which the Indemnifying Party has not assumed the defense thereof (other than during any period in which the Indemnified Party will have failed to give notice of the Non-Party Claim as provided above). If the Indemnifying Party chooses to defend or prosecute a Non-Party Claim, all of the parties hereto will cooperate in the defense or prosecution thereof. Such cooperation will include the retention and (upon the Indemnifying Party’s request) the provision to the Indemnifying Party of records and information, which are reasonably relevant to such Non-Party Claim, and making employees available on a mutually convenient basis to provide additional information and explanation of any material provided hereunder. If the Indemnifying Party chooses to defend or prosecute any Non-Party Claim, the Indemnifying Party will seek the approval of the Indemnified Party (not to be unreasonably withheld) to any settlement, compromise or discharge of such Non-Party Claim the Indemnifying Party may recommend and which by its terms obligates the Indemnifying Party to pay the full amount of the liability in connection with such Non-Party Claim. Whether or not the Indemnifying Party will have assumed the defense of a Non-Party Claim, the Indemnified Party will not admit any liability with respect to, or settle, compromise or discharge, such Non-Party Claim without the Indemnifying Party’s prior written consent. The Indemnifying Party shall reimburse upon demand, all reasonable costs and expenses incurred by the Indemnified Party in cooperation with the defense or prosecution of the Non-Party Claim.

{***} Confidential portions of this exhibit have been redacted and filed separately with the Commission pursuant to a confidential treatment request in accordance with Rule 24b-2 of the Securities Exchange Act of 1934, as amended

Section 8.4                   Exclusive Remedy.

The indemnification rights provided in this Article 8 shall constitute the sole and exclusive remedy with respect to all claims of any kind or nature related to, or arising out of, or in connection with, any breach of or inaccuracy in any representation, warranty or covenant contained in this Agreement (other than claims arising from fraud or intentional misrepresentation on the part of a party in connection with the transactions contemplated by this Agreement). Nothing in this Section 8.4 shall limit any party's right to seek and obtain any equitable relief, including specific performance, to which any party shall be entitled or to seek any remedy on account of any party's fraudulent or intentional misrepresentation.

Article 9

GENERAL PROVISIONS

Section 9.1                   Expenses

Except as otherwise specified in this Agreement, all costs and expenses, including fees and disbursements of counsel, financial advisors and accountants, incurred in connection with this Agreement and the transactions contemplated hereby will be paid by the party incurring such costs and expenses, whether or not the Closing will have occurred.

Section 9.2                   Further Assurances and Actions

Each of the parties hereto, upon the request of the other party hereto, whether before or after the Closing and without further consideration, will do, execute, acknowledge and deliver or cause to be done, executed, acknowledged or delivered all such further acts, deeds, documents, assignments, transfers, conveyances, powers of attorney and assurances as may be reasonably necessary to effect complete consummation of the transactions contemplated by this Agreement. Seller and Buyer agree to execute and deliver such other documents, certificates, agreements and other writings and to take such other actions as may be reasonably necessary in order to consummate or implement expeditiously the transactions contemplated by this Agreement.

{***} Confidential portions of this exhibit have been redacted and filed separately with the Commission pursuant to a confidential treatment request in accordance with Rule 24b-2 of the Securities Exchange Act of 1934, as amended

Section 9.3                   Notices

All notices and other communications required or permitted to be given or made pursuant to this Agreement shall be in writing signed by the sender and shall be deemed duly given: (a) on the date delivered, if personally delivered, (b) on the date sent by facsimile with automatic confirmation by the transmitting machine showing the proper number of pages were transmitted without error, (c) on the Business Day after being sent by Federal Express or another recognized overnight mail service which utilizes a written form of receipt for next day or next business day delivery, or (d) upon receipt after mailing, if mailed by United States postage-prepaid certified or registered mail, return receipt requested, in each case addressed to the applicable party at the address set forth below: provided that a party may change its address for receiving notice by the proper giving of notice hereunder:

Mikah Pharma LLC

20 Kilmer Drive

Hillsborough, New Jersey, 08844

Attention: Nasrat Hakim, President

Fax No.: (908) 450-1318

Fax No.: (201) 750-2755

With a courtesy copy, which shall not constitute notice hereunder, sent to:

Richard Feiner, Esq.

381 Park Avenue South

16 ^th floor

New York, NY 10016

Section 9.4                   Headings

The table of contents and headings contained in this Agreement are for reference purposes only and will not affect in any way the meaning or interpretation of this Agreement.

{***} Confidential portions of this exhibit have been redacted and filed separately with the Commission pursuant to a confidential treatment request in accordance with Rule 24b-2 of the Securities Exchange Act of 1934, as amended.

Section 9.5                   Severability

If any term or other provision of this Agreement is invalid, illegal or incapable of being enforced under any law or public policy, all other terms and provisions of this Agreement will nevertheless remain in full force and effect so long as the economic or legal substance of the transactions contemplated hereby is not affected in any manner materially adverse to any party. Upon such determination that any term or other provision is invalid, illegal or incapable of being enforced, the parties hereto will negotiate in good faith to modify this Agreement so as to effect the original intent of the parties hereto as closely as possible in an acceptable manner in order that the transactions contemplated hereby are consummated as originally contemplated to the greatest extent possible.

Section 9.6                   Counterparts

This Agreement may be executed in one (1) or more counterparts, all of which will be considered one and the same agreement and will become effective when one or more counterparts have been signed by each of the Parties hereto and delivered to the other parties hereto. This Agreement, once executed by a Party, may be delivered to the other Party hereto by facsimile or electronic transmission of a copy of this Agreement bearing the signature of the Party so delivering this Agreement. A faxed or electronically delivered signature shall have the same legally binding effect as an original signature.

Section 9.7                   Entire Agreement: No Non-Party Beneficiaries

This Agreement and the Exhibits and Schedules hereto constitute the entire agreement and supersede all prior agreements and understandings both written and oral (including any letter or intent, memorandum of understanding electronic communicators, e-mail or term sheet), between or among the parties hereto with respect to the subject matter hereof. Except as specifically provided herein or therein, such agreements are not intended to confer upon any non-party other than the parties hereto any rights or remedies hereunder or thereunder.

Section 9.8                   Governing Law

This Agreement and any and all matters arising directly or indirectly herefrom shall be governed by and construed and enforced in accordance with the laws of the State of New Jersey, U.S.A. applicable to agreements made and to be performed entirely in such state, without giving effect to the conflict of law principles thereof.

Section 9.9                   Jurisdiction, Venue, Service of Process

Buyer and Seller agree to irrevocably submit to the sole and exclusive jurisdiction of the state or federal courts in the state of New Jersey for any suit, action or other proceeding arising out of this Agreement or any transaction contemplated hereby. Notwithstanding the foregoing, only if such suit, action or other proceeding may not be brought in New Jersey, it may instead be brought in a Delaware court of appropriate jurisdiction. Each party agrees that service of any process, summons, notice or document by U.S. registered mail or recognized international courier service to such party’s address set forth in Section 14.3this Agreement shall be effective service of process.

{***} Confidential portions of this exhibit have been redacted and filed separately with the Commission pursuant to a confidential treatment request in accordance with Rule 24b-2 of the Securities Exchange Act of 1934, as amended

Section 9.10               Specific Performance

The parties hereto agree that irreparable damage would occur in the event any provision of this Agreement were not performed in accordance with the terms hereof and that the parties will be entitled to specific performance of the terms hereof, in addition to any other remedy at law or in equity, without the necessity of demonstrating the inadequacy of monetary damages and without the posting of a bond.

Section 9.11               Force Majeure

Neither party will be in default of this Agreement to the extent that performance of its obligations (other than obligations to pay amounts owed under this Agreement) is delayed or prevented by reason of events or circumstances beyond its reasonable control, including without limitation, earthquake, flood or other acts of God, fire, explosion, terrorism, war, compliance with laws, regulations or governmental or judicial orders, labor disputes, unavailability of transportation (“ Force Majeure ”). Should either party be delayed in or prevented from performing any of its obligations under this Agreement by reason of Force Majeure, such party shall give prompt notice thereof to the other party and shall be obligated to perform the affected obligations within sixty (60) days after the Force Majeure ceases to delay or prevent performance thereof.

Section 9.12               Publicity

Neither party will make any public announcement concerning, or otherwise publicly disclose, any information with respect to the transactions contemplated by this Agreement or any of the terms and conditions hereof without the prior written consent of the other parties hereto. Notwithstanding the foregoing, either party may make any public disclosure concerning the transactions contemplated hereby that in the opinion of such party’s counsel may be required by law or the rules of any stock exchange on which such party’s or its Affiliates’ securities trade; provided , however , the party making such disclosure will provide the non-disclosing party with a copy of the intended disclosure reasonably, and to the extent practicable, prior to public dissemination, and the parties hereto will coordinate with one another regarding the timing, form and content of such disclosure. Notwithstanding the foregoing, after the Closing, Buyer may publicize its ability to market and sell the Product(s) without approval from Seller.

Section 9.13               Schedules and Exhibits .

The Schedules and all Exhibits attached hereto are hereby incorporated by reference into, and made a part of, this Agreement.

Section 9.14               Ambiguities .

Each Party and its counsel have participated fully in the review and revision of this Agreement. Any rule of construction to the effect that ambiguities are to be resolved against the drafting party shall not apply in interpreting this Agreement. The language in this Agreement shall be interpreted as to its fair meaning and not strictly for or against any Party.

{***} Confidential portions of this exhibit have been redacted and filed separately with the Commission pursuant to a confidential treatment request in accordance with Rule 24b-2 of the Securities Exchange Act of 1934, as amended.

Section 9.15               Assignment

Neither party may assign its rights or obligations under this Agreement without the prior written consent of the other party; provided , however , that either party may assign its rights and obligations under this Agreement, without the prior written consent of the other party, to an Affiliate or to a successor of the assignment party by reason of merger, sale of all or substantially all of its assets or any similar transaction. Any permitted assignee or successor-in-interest will assume all obligations of its assignor under this Agreement. No assignment will relieve either party of its responsibility for the performance of any obligation. This Agreement will be binding upon and inure to the benefit of the parties hereto and their respective successors and permitted assigns.

[signature page follows]

{***} Confidential portions of this exhibit have been redacted and filed separately with the Commission pursuant to a confidential treatment request in accordance with Rule 24b-2 of the Securities Exchange Act of 1934, as amended

IN WITNESS WHEREOF , the parties hereto have caused this Agreement to be signed by their respective representatives thereunto duly authorized, all as of the date first written above.

{***} Confidential portions of this exhibit have been redacted and filed separately with the Commission pursuant to a confidential treatment request in accordance with Rule 24b-2 of the Securities Exchange Act of 1934, as amended.

[Redacted Version]

Execution Copy: August 1, 2013

__________________________________

{***} Confidential portions of this exhibit have been redacted and filed separately with the Commission pursuant to a confidential treatment request in accordance with Rule 24b-2 of the Securities Exchange Act of 1934, as amended

EXHIBIT A

BILL OF SALE

THIS BILL OF SALE, dated August 1, 2013, is executed by Mikah Pharma LLC (“Seller”), a limited liability company organized under the laws of Delaware in favor of Elite Laboratories, Inc. (“Buyer”), a corporation incorporated under the laws of Delaware, pursuant to the Asset Purchase Agreement, dated August 1, 2013 (the “Agreement”), by and between Seller and Buyer. Capitalized terms used but not defined herein have the meanings given to them in the Agreement.

i. The Agreement provides for, among other things, the sale of the Purchased Assets by Seller to Buyer.

ii. In consideration of the payment of the amounts set forth in the Agreement, Seller by this Bill of Sale does hereby, sell, transfer, assign and deliver to Buyer, all of its rights, title and interest in and to the Purchased Assets.

iii. Seller hereby represents that from time to time after the delivery of this instrument, at Buyer’s request and without further consideration, Seller will do, execute, acknowledge and deliver, or will cause to be done, executed, acknowledged and delivered, all such further acts, deeds, conveyances, transfers, assignments, powers of attorney and assurances as reasonably may be required more effectively to convey, transfer to and vest in Buyer, and to put Buyer in possession of, the Purchased Assets.

iv. This instrument is executed by, and will be binding upon, Seller and its successors and assigns for the uses and purposes set forth herein.

v. This Bill of Sale shall be construed and enforced in accordance with the laws of the State of New Jersey.

IN WITNESS WHEREOF , this Bill of Sale has been duly executed and delivered by Seller as of the date and year first written above.

__________________________________

{***} Confidential portions of this exhibit have been redacted and filed separately with the Commission pursuant to a confidential treatment request in accordance with Rule 24b-2 of the Securities Exchange Act of 1934, as amended

[Redacted Version]

Execution Copy: August 1, 2013

EXHIBIT B

FORM OF SECURED CONVERTIBLE PROMISSORY NOTE

__________________________________

{***} Confidential portions of this exhibit have been redacted and filed separately with the Commission pursuant to a confidential treatment request in accordance with Rule 24b-2 of the Securities Exchange Act of 1934, as amended

[Redacted Version]

Execution Copy: August 1, 2013

EXHIBIT C

FORM OF ANDA SECURITY AGREEMENT

__________________________________

{***} Confidential portions of this exhibit have been redacted and filed separately with the Commission pursuant to a confidential treatment request in accordance with Rule 24b-2 of the Securities Exchange Act of 1934, as amended

Execution Copy: August 1, 2013

NEITHER THIS SECURED CONVERTIBLE PROMISSORY NOTE (THE “ NOTE ”) NOR THE SECURITIES INTO WHICH THIS SECURITY IS CONVERTIBLE (COLLECTIVELY, THE “ SECURITIES ”) HAVE BEEN REGISTERED WITH THE SECURITIES AND EXCHANGE COMMISSION OR THE SECURITIES COMMISSION OF ANY STATE IN RELIANCE UPON AN EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “ SECURITIES ACT ”), AND, ACCORDINGLY, MAY NOT BE OFFERED OR SOLD EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT OR PURSUANT TO AN AVAILABLE EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND IN ACCORDANCE WITH APPLICABLE STATE SECURITIES LAWS AS EVIDENCED BY A LEGAL OPINION OF COUNSEL, THE SUBSTANCE OF WHICH SHALL BE REASONABLY ACCEPTABLE TO THE COMPANY. ANY TRANSFEREE OF THIS NOTE SHOULD CAREFULLY REVIEW THE TERMS OF THE NOTE, INCLUDING SECTION 7(b) HEREOF. THE PRINCIPAL AMOUNT OUTSTANDING UNDER THIS NOTE MAY BE LESS THAN THE AMOUNT STATED ON THE FACE HEREOF PURSUANT TO SECTION 7(b) HEREOF.

ELITE PHARMACEUTICALS, INC. AND ELITE LABORATORIES, INC.
SECURED CONVERTIBLE NOTE DUE 2016

FOR VALUE RECEIVED, pursuant to the Purchase Agreement (as defined below), ELITE PHARMACEUTICALS, INC., a Nevada corporation (the “ Company ”) and its wholly-owned subsidiary, ELITE LABORATORIES, INC., a Delaware corporation (“ Elite ” and, together with the Company, the “ Debtors ”), jointly and severally, promise to pay to the order of MIKAH PHARMA LLC, a limited liability company organized under the laws of the State of Delaware (the “ Holder ”), the principal sum of Ten Million Dollars and no cents ($10,000,000), on the Maturity Date (as defined below), or such earlier date as the Note is required or permitted to be repaid as provided hereunder.

This Note is interest free.

Payments of principal shall be made in lawful money of the United States of America to the Holder at its address as provided in Section 13 or by wire transfer to such account specified from time to time by the Holder hereof for such purpose by notice as provided in Section 13 .

1.                   Definitions . In addition to the terms defined elsewhere in this Note, (a) capitalized terms that are not otherwise defined herein have the meanings given to such terms in the Asset Purchase Agreement by and between Holder and Elite of even date (the “ Purchase Agreement ”), and (b) the following terms have the meanings indicated:

“ Bankruptcy Event ” means any of the following events: (a) any of the Debtors commences a case or other proceeding under any bankruptcy, reorganization, arrangement, adjustment of debt, relief of debtors, dissolution, insolvency or liquidation or similar law of any jurisdiction relating to such Debtor; (b) there is commenced against any of the Debtors any such case or proceeding that is not dismissed within 60 days after commencement; (c) any of the Debtors is adjudicated insolvent or bankrupt or any order of relief or other order approving any such case or proceeding is entered; (d) any of the Debtors suffers any appointment of any custodian or the like for it or any substantial part of its property that is not discharged or stayed within 60 days; (e) any of the Debtors makes a general assignment for the benefit of creditors; (f) any of the Debtors calls a meeting of its creditors with a view to arranging a composition, adjustment or restructuring of its debts; or (g) any of the Debtors, by any act or failure to act, expressly indicates its consent to, approval of or acquiescence in any of the foregoing or takes any corporate or other action for the purpose of effecting any of the foregoing.

8K 2013 8 5 Exhibit 10 2 Secured Convertible Note.doc

“ Change of Control ” will be deemed to exist if (i) there occurs any consolidation, merger or other business combination of a Debtor with or into any other corporation or other entity or person (whether or not such Debtor is the surviving corporation), or any other corporate reorganization or transaction or series of related transactions in which in any of such events the voting stockholders of such Debtor prior to such event cease to own fifty percent (50%) or more of the voting power, or corresponding voting equity interests, of the surviving corporation after such event (including without limitation: (x) any “going private” transaction under Rule 13e-3 promulgated pursuant to the 1934 Act or (y) any tender offer by the Company under Rule 13e-4 promulgated pursuant to the 1934 Act for twenty percent (20%) or more of the Company's Common Stock), (ii) any person (as defined in Section 13(d) of the 1934 Act) beneficially owns or is deemed to beneficially own (as described in Rule 13d-3 under the 1934 Act without regard to the 60-day exercise period) in excess of fifty percent (50%) of the Company’s voting power, (iii) there is a replacement of more than one-half of the members of the Company’s Board of Directors which is not approved by a majority of those individuals who are members of the Company’s Board of Directors on the Original Issue Date, (iv) in one or a series of related transactions, there is a sale or transfer of all or substantially all of the assets of the Company, determined on a consolidated basis, or (v) any Debtor enters into any agreement providing for an event set forth in (i), (ii), (iii) or (iv) above.

“ Common Stock ” means shares of the Company’s common stock, $0.001 par value.

“ Common Stock Deemed Outstanding ” means, at any given time, the sum of (a) the number of shares of Common Stock actually outstanding at such time, plus (b) the number of shares of Common Stock issuable upon exercise of options outstanding at such time, plus (c) the number of shares of Common Stock issuable upon conversion or exchange of Convertible Securities actually outstanding at such time (treating as outstanding any Convertible Securities issuable upon exercise of options outstanding at such time), in each case, regardless of whether the options or Convertible Securities are actually exercisable at such time; provided , that Common Stock Deemed Outstanding at any given time shall not include shares owned or held by or for the account of the Company or any of its wholly owned subsidiaries.

“ Conversion Date ” means the date any Conversion Notice is delivered to the Company together with the Conversion Schedule pursuant to Section 6(a) .

“ Conversion Notice ” means a written notice in the form attached hereto as Schedule 1 .

“ Conversion Price ” means $0.07, subject to adjustment from time to time pursuant to Section 10.

“ Conversion Shares ” means shares of Common Stock issuable to holder upon Conversion.

“ Convertible Securities ” means any convertible securities, preferred stock, warrants, options or other rights to subscribe for or to purchase or exchange for, shares of Common Stock.

“ Excluded Stock ” means the issuance of (a) shares of Common Stock or options to employees, consultants, officers or directors of the Company pursuant to (i) any stock or option plan duly adopted by a majority of the non-employee members of the Board of Directors of the Company or a majority of the members of a committee of non-employee directors established for such purpose or (ii) employment agreements with Company employees, (b) securities upon the exercise or exchange of or conversion of Convertible Securities outstanding as of the date of this Note, provided that such securities are not amended subsequent to the date of this Note to increase the number of such securities or to decrease the exercise, exchange or conversion price of any such securities, (c) securities issued pursuant to acquisitions or strategic transactions approved by a majority of the disinterested directors, provided any such issuance shall only be to a Person which is, itself or through its subsidiaries, an operating company in, or an individual that operates, a business synergistic with the business of the Company and in which the Company receives benefits in addition to the investment of funds, but shall not include a transaction in which the Company is issuing securities primarily for the purpose of raising capital or to an entity whose primary business is investing in securities, (d) up to a maximum of 5,000,000 shares of Common Stock or Common Stock equivalents in any rolling 12 month period issued to consultants, vendors, financial institutions or lessors in connection with services provided by such Persons referred to in this clause (d), but shall not include a transaction in which the Company is issuing securities primarily for the purpose of raising capital or to an entity whose primary business is investing in securities, and provided that none of such shares may be registered for sale or resale by any of such holders; (e) securities issued as dividends payable upon any shares of Company Preferred Stock issued and outstanding as of the Original Issue Date; (f) securities issued pursuant to the terms of any of the Transaction Documents and (g) securities issued in connection with any stock split, stock dividend or recapitalization of the Common Stock.

“ Issuable Maximum ” means: (a) for purposes of Section 6(b)(i) a number of shares of Common Stock equal to 19.99% of the of the Company's outstanding shares on the Original Issue Date; and (b) for purposes of Section 6(b)(ii) and (iii) the balance of authorized shares of Common Stock that are not issued, outstanding or reserved for issuance.

“ Market Price ” means the average closing price of a share of Common Stock on the principal Trading Market on which such shares are then trading for the 10 Trading Days immediately preceding the Mandatory Conversion Date.

“ Maturity Date ” means the third anniversary of the Original Issue Date.

“ Original Issue Date ” means the date of the first issuance of this Note, regardless of the number of transfers of any particular Note.

“ Person ” means any individual, corporation, partnership, limited liability company, joint venture, trust, business association, organization, Governmental Entity or other entity.

“ Security Agreement ” means the Security Agreement of even date between the Holder as Secured Party and the Debtors as Debtors.

“ Shareholder Approval ” means (a) for purposes of Section 6(b)(i) , the vote of Company shareholders, if and as may be required by the applicable rules and regulations of the Company’s Trading Market (or any successor entity) to approve the issuance of shares of Common Stock in excess of the Issuable Maximum; and (b) for purposes of Section 6(b)(iii) , the vote of Company shareholders, as may be required by Nevada law to approve the issuance of shares of Common Stock in excess of the Issuable Maximum.

“ Trading Day ” means any day that the Trading Market upon which the Common Stock trades or is quoted is open.

“ Trading Market ” means any of the following markets or exchanges on which the Common Stock is listed or quoted for trading on the date in question: (a) the following National Markets: the NYSE MKT, the Nasdaq Capital Market, the Nasdaq Global Market, the Nasdaq Global Select Market, the New York Stock Exchange or (b) the OTC Bulletin Board (or any successors to any of the foregoing).

“ Transaction Documents ” means, collectively, this Note, the Purchase Agreement, the Security Agreement, and the schedules and exhibits hereto and thereto.

“ Triggering Event ” means any of the following events: (a) the Common Stock is not listed or quoted, or is suspended from trading, on a Trading Market for a period of five or more Trading Days (which need not be consecutive Trading Days); (b) subject to subsection c below, the Company fails to have available a sufficient number of authorized but unissued and otherwise unreserved shares of Common Stock available to issue the Conversion Shares upon any conversion of this Note; (c) if at any time commencing 30 Trading Days after the Shareholder Approval, any Common Stock issuable pursuant to the Transaction Documents is not listed on a Trading Market; (d) if Shareholder Approval is required, the Company shall have failed to receive the Shareholder Approval within four (4) months of the requirement to obtain such Shareholder Approval; (e) any of the Debtors fails to make any cash payment required under the Transaction Documents and such failure is not cured within fifteen (15) calendar days after notice of such default is first given to such Debtor by the Holder; or (f) any of the Debtors defaults in the timely performance of any other obligation under the Transaction Documents and such default continues uncured for a period of thirty (30) calendar days after the date on which notice of such default is first given to such Debtor by the Holder (it being understood that no prior notice need be given in the case of a default that cannot reasonably be cured within such thirty (30) days).

2.                   Payment of Principal .

(a)                 Principal Payment at Maturity . The Company shall pay the outstanding principal balance of this Note to the Holder on the Maturity Date.

3.                   Covenants .

(a)                 Except to the extent that Shareholder Approval is required by Section 6(b) , the Company covenants that it will at all times reserve and keep available out of its authorized but unissued and otherwise unreserved Common Stock, solely for the purpose of enabling it to issue Conversion Shares as required hereunder, the number of Conversion Shares which are then issuable and deliverable upon the conversion of (and otherwise in respect of) this entire Note (taking into account the adjustments set forth in Section 10 ), free from preemptive rights or any other contingent purchase rights of Persons other than the Holder. The Company covenants that all Conversion Shares so issuable and deliverable shall, upon issuance in accordance with the terms hereof, be duly and validly authorized and issued and fully paid and nonassessable.

4.                   Registration of Notes . The Debtors shall register the Note upon records to be maintained by the Debtors for that purpose (the “ Note Register ”) in the name of the record holder thereof from time to time. The Debtors may deem and treat the registered Holder of this Note as the absolute owner hereof for the purpose of any conversion hereof or any payment of principal hereon, and for all other purposes, absent actual notice to the contrary.

5.                   Transfers; Registration thereof .

(a)                 The Holder is not permitted to transfer this Note or any of its rights thereunder; except to its sole member or any other entity wholly-owned by its sole member; provided that the transferee of any such permitted transfer agrees to be bound by this and any other restrictions of Holder under the Note.

(b)                The Debtors shall register the transfer of any portion of this Note in the Note Register upon surrender of this Note to the Debtors at its address for notice set forth herein. Upon any such registration or transfer, a new Note, in substantially the form of this Note (any such new Note, a “ New Note ”), evidencing the portion of this Note so transferred shall be issued to the transferee and a New Note evidencing the remaining portion of this Note not so transferred, if any, shall be issued to the transferring Holder. The acceptance of the New Note by the transferee thereof shall be deemed the acceptance by such transferee of all of the rights and obligations of a holder of a Note. No service charge or other fee will be imposed in connection with any such registration of transfer or exchange.

6.                   Conversion .

(a)                 At the Option of the Holder . All or any portion of the principal of this Note shall be convertible into shares of Common Stock (subject to the limitations set forth in Section 6(b) ), at the option of the Holder, at any time, and from time to time, from and after the first anniversary of the Original Issue Date. The number of Conversion Shares issuable upon any conversion hereunder shall equal the outstanding principal amount of this Note to be converted, divided by the Conversion Price. The Holder shall effect conversions under this Section 6(a) by delivering to the Company a Conversion Notice together with a schedule in the form of Schedule 2 attached hereto (the “ Conversion Schedule ”). If the Holder is converting less than all of the principal amount of this Note, or if a conversion hereunder may not be effected in full due to the application of Section 6(b) , the Company shall honor such conversion to the extent permissible hereunder and shall promptly deliver to the Holder a Conversion Schedule indicating the principal amount which has not been converted.

(b)                Conversion Restrictions . Anything set forth herein to the contrary notwithstanding:

(i)                  If the Company is listed on a Trading Market that is a National Market and the Company has not previously obtained Shareholder Approval, and such National Market requires Shareholder Approval then the Company may not issue in excess of the Issuable Maximum upon conversions of the Notes. If on any Conversion Date: (A) the aggregate number of shares of Common Stock that would then be issuable upon conversion in full of the then outstanding principal amount of Note would exceed the Issuable Maximum, and (B) the Company shall not have previously obtained Shareholder Approval, then the Company shall issue to the converting Holder a number of shares of Common Stock up to the Issuable Maximum. The Company and the Holder understand and agree that shares of Common Stock issued to and then held by the Holder as a result of conversions of the Note shall not be entitled to cast votes on any resolution to obtain Shareholder Approval pursuant hereto.

(ii)                If, upon any Conversion Date prior to the second anniversary of the Original Issue Date, there is not a sufficient number of authorized shares of Common Stock (that are not issued, outstanding or reserved for issuance) available to effect the entire Conversion, such conversion shall not exceed the Issuable Maximum.

(iii)              If, upon any Conversion Date on or after the second anniversary of the Original Issue Date, there is not a sufficient number of authorized shares of Common Stock (that are not issued, outstanding or reserved for issuance) available to effect the entire Conversion, such conversion shall not exceed the Issuable Maximum; however, the Company shall use its best efforts to obtain Shareholder Approval within four (4) months of such Conversion Date to permit the balance of the conversion.

(c) Mandatory Conversion . Notwithstanding any other provision of this Note to the contrary, if, on the date (the “ Mandatory Conversion Date ”) any payment under this Note is due and payable whether on the date on which the obligations under the Note mature or by acceleration, redemption, prepayment or otherwise other than as a result of a Bankruptcy Event (a “ Payment ”), the Market Price of the Common Stock is below $0.15 (as adjusted for any stock split, stock dividend or recapitalization of the Common Stock), any such Payment shall automatically be converted into Common Stock at the Conversion Price. If there is not a sufficient number of authorized shares of Common Stock that are not issued, outstanding or reserved for issuance to permit full conversion of the payment under this Subsection 6(c) (such insufficient number of shares of Common Stock, the “ Balance Shares ”), the Company shall issue to the Holder, in lieu of the Balance Shares a one year option to acquire the Balance Shares in exchange for the portion of the Payment represented by the Balance Shares. Should the Company not increase its authorized number of shares of Common Stock to permit exercise of such option within four (4) months of the date of the issuance of such options, the Company shall be required to redeem such option for the portion of the Payment represented by the Balance Shares.

7.                   Mechanics of Conversion .

(a)                 Upon conversion of this Note, the Company shall promptly (i) issue or cause to be issued and cause to be delivered to or upon the written order of the Holder and in the name of the Holder a certificate for the Conversion Shares issuable upon such conversion or (ii) instruct the Company’s transfer agent to issue such Conversion Shares in book entry form and promptly notify Holder of same. Such Shares shall be restricted securities, not transferable unless registered under the Securities Act or such transfer is permitted pursuant to an exemption from such registration under the Securities Act. The Holder shall be deemed to have become holder of record of such Conversion Shares as of the Conversion Date.

(b)                The Holder shall not be required to deliver the original Note in order to effect a conversion hereunder. Execution and delivery of the Conversion Notice shall have the same effect as cancellation of the original Note and issuance of a New Note representing the remaining outstanding principal amount. Upon surrender of this Note following one or more partial conversions, the Debtors shall promptly deliver to the Holder a New Note representing the remaining outstanding principal amount.

8.                   Events of Default .

(a)                 “ Event of Default ” means any one of the following events (whatever the reason and whether it shall be voluntary or involuntary or effected by operation of law or pursuant to any judgment, decree or order of any court, or any order, rule or regulation of any administrative or governmental body):

(i)                  any default in the payment of principal in respect of the Note, as and when the same becomes due and payable (whether on the date on which the obligations under the Note mature or by acceleration, redemption, prepayment or otherwise) and such default continues for a period of fifteen (15) Trading Days;

(ii)                a material breach by any of the Debtors of its covenants, representations or warranties hereunder or in any other Transaction Document that remains uncured for a period of thirty (30) days following receipt by the Debtors of written notice of such breach;

(iii)              the occurrence of a Triggering Event;

(iv)              any Debtor, which is a partnership, limited liability company, limited partnership or a corporation, dissolves, suspends or discontinues doing business (other than a consolidation or similar transaction between the Debtors); or

(v)                the occurrence of a Bankruptcy Event.

(b)                At any time or times following the occurrence of an Event of Default, all amounts due and owing under this Note shall become immediately due and payable.

(c)                 Upon the occurrence of any Bankruptcy Event, all amounts due and owing under this Note shall immediately become due and payable in full in cash and not in Common Stock, without any further action by the Holder.

(d)                In connection with any Event of Default, the Holder need not provide and the Debtors hereby waive any presentment, demand, protest or other notice of any kind, and the Holder may immediately and without expiration of any grace period enforce any and all of its rights and remedies hereunder, under any of the Transaction Documents and all other remedies available to it under applicable law. Any such declaration may be rescinded and annulled by the Holder at any time prior to payment hereunder. No such rescission or annulment shall affect any subsequent Event of Default or impair any right consequent thereto. The remedies under this Note and any other Transaction Document or available under applicable law shall be cumulative.

9. Charges, Taxes and Expenses . Issuance of certificates for Conversion Shares upon conversion of (or otherwise in respect of) this Note shall be made without charge to the Holder for any issue or transfer tax, withholding tax, transfer agent fee or other incidental tax or expense in respect of the issuance of such certificate, all of which taxes and expenses shall be paid by the Company. The Holder shall be responsible for all other tax liability that may arise as a result of holding or transferring this Note or receiving Conversion Shares in respect hereof.

10. Certain Adjustments . The Conversion Price is subject to adjustment from time to time as set forth in this Section 10 .

(a) Stock Dividends and Splits . If the Company, at any time while this Note is outstanding, (i) pays a stock dividend on its Common Stock or otherwise makes a distribution on any class of capital stock that is payable in shares of Common Stock (other than regular dividends on shares of the Company’s shares of preferred stock issued and outstanding as of the Original Issue Date), (ii) subdivides outstanding shares of Common Stock into a larger number of shares, or (iii) combines outstanding shares of Common Stock into a smaller number of shares, then in each such case the Conversion Price shall be multiplied by a fraction of which the numerator shall be the number of shares of Common Stock outstanding immediately before such event and of which the denominator shall be the number of shares of Common Stock outstanding immediately after such event. Any adjustment made pursuant to clause (i) of this Section 10(a) shall become effective immediately after the record date for the determination of stockholders entitled to receive such dividend or distribution, and any adjustment pursuant to clause (ii) or (iii) of this Section 10(a) shall become effective immediately after the effective date of such subdivision or combination.

(b) Pro Rata Distributions . If the Company, at any time while this Note is outstanding, distributes to all holders of Common Stock (i) evidences of its indebtedness, (ii) any security (other than a distribution of Common Stock described in Section 10(c) ), (iii) rights or warrants to subscribe for or purchase any security, or (iv) cash or any other asset (in each case, “ Distributed Property ”), then, at the request of the Holder delivered before the 90th day after the record date fixed for determination of stockholders entitled to receive such distribution, the Company will deliver to the Holder, within five (5) Trading Days after such request (or, if later, on the effective date of such distribution), the Distributed Property that the Holder would have been entitled to receive in respect of the Conversion Shares for which this Note could have been converted immediately prior to such record date. If such Distributed Property is not delivered to the Holder pursuant to the preceding sentence, upon any conversion of this Note that occurs after such record date, the Holder shall be entitled to receive, in addition to the Conversion Shares otherwise issuable upon such conversion, the Distributed Property that the Holder would have been entitled to receive in respect of such number of Conversion Shares had the Holder been the record holder of such Conversion Shares immediately prior to such record date.

(c) Fundamental Changes . If, at any time while this Note is outstanding, (i) the Company effects any merger or consolidation of the Company with or into another Person, (ii) any Debtor effects any sale of all or substantially all of its assets in one or more transactions, (iii) any tender offer or exchange offer (whether by the Company or another Person) is completed pursuant to which holders of Common Stock are permitted to tender or exchange their shares for other securities, cash or property, or (iv) the Company effects any reclassification of the Common Stock or any compulsory share exchange pursuant to which the Common Stock is effectively converted into or exchanged for other securities, cash or property (other than as a result of a subdivision or combination of shares of Common Stock described in Section 10(a) ) (in any such case, a “ Fundamental Change ”), then upon any subsequent conversion of this Note, the Holder shall have the right to receive, for each Conversion Share that would have been issuable upon such conversion absent such Fundamental Change, the same kind and amount of securities, cash or property as it would have been entitled to receive upon the occurrence of such Fundamental Change if it had been, immediately prior to such Fundamental Change, the holder of one share of Common Stock (the “ Alternate Consideration ”). If holders of Common Stock are given any choice as to the securities, cash or property to be received in a Fundamental Change, then the Holder shall be given the same choice as to the Alternate Consideration it receives upon any conversion of this Note following such Fundamental Change. In the event of a Fundamental Change, the Debtors or the successor or purchasing Person, as the case may be, shall execute with the Holder a written agreement providing that:

(i)                  This Note shall thereafter entitle the Holder to purchase the Alternate Consideration, and

(ii)                In the case of any such successor or purchasing Person, upon such consolidation, merger, statutory exchange, combination, sale or conveyance such successor or purchasing Person shall be jointly and severally liable with the Debtors for the performance of all of the Debtors’ obligations under this Note and the other Transaction Documents.

If, in the case of any Fundamental Change, the Alternate Consideration includes shares of stock, other securities, other property or assets of a Person other than the Company or any such successor or purchasing Person, as the case may be, in such Fundamental Change, then such written agreement shall also be executed by such other Person and shall contain such additional provisions to protect the interests of the Holder as the Board of Directors of the Company shall reasonably consider necessary by reason of the foregoing. At the Holder’s request, any successor to any of the Debtors or surviving Person in such Fundamental Change shall issue to the Holder a new Note consistent with the foregoing provisions and evidencing the Holder’s right to convert such Note into Alternate Consideration. The terms of any agreement pursuant to which a Fundamental Change is effected shall include terms requiring any such successor or surviving Person to comply with the provisions of this Section 10(c) and insuring that this Note (or any such replacement security) will be similarly adjusted upon any subsequent transaction analogous to a Fundamental Change.

(d) Antidilution Adjustment of Conversion Price upon Issuance of Common Stock . If at any time this Note is outstanding, the Company issues or sells, or in accordance with this Section 10(d) is deemed to have issued or sold, any shares of Common Stock, with the exception of Excluded Stock, for a consideration per share less than the Conversion Price in effect immediately prior to such time (each such sale or issuance, a “ Dilutive Issuance ”), then concurrent with such Dilutive Issuance, the Conversion Price then in effect shall be reduced to a price (rounded to the nearest cent) equal to the product of (A) the Conversion Price in effect immediately prior to such Dilutive Issuance and (B) the quotient determined by dividing (1) the sum of (I) the product derived by multiplying the Conversion Price in effect immediately prior to such Dilutive Issuance and the number of shares of Common Stock Deemed Outstanding immediately prior to such Dilutive Issuance plus (II) the consideration, if any, received by the Company upon such Dilutive Issuance, by (2) the product derived by multiplying (I) the Conversion Price in effect immediately prior to such Dilutive Issuance by (II) the number of shares of Common Stock Deemed Outstanding immediately after such Dilutive Issuance.

(e) Calculations . All calculations under this Section 10 shall be made to the nearest cent or the nearest 1/100th of a share, as applicable. The number of shares of Common Stock outstanding at any given time shall not include shares owned or held by or for the account of the Company, and the disposition of any such shares shall be considered an issue or sale of Common Stock.

(f) Notice of Adjustments . Upon the occurrence of each adjustment pursuant to this Section 10 , the Company at its expense will promptly compute such adjustment in accordance with the terms hereof and prepare and deliver to the Holder a certificate describing in reasonable detail such adjustment and the transactions giving rise thereto, including all facts upon which such adjustment is based.

(g) Notice of Corporate Events . If the Company (i) declares a dividend or any other distribution of cash, securities or other property in respect of its Common Stock, including without limitation any granting of rights or warrants to subscribe for or purchase any capital stock of the Company or any Subsidiary, (ii) authorizes or approves, enters into any agreement contemplating, or solicits stockholder approval for, any Fundamental Change or (iii) authorizes the voluntary dissolution, liquidation or winding up of the affairs of the Company, then the Company shall deliver to the Holder a notice describing the material terms and conditions of such transaction, at least twenty (20) Trading Days prior to the applicable record or effective date on which a Person would need to hold Common Stock in order to participate in or vote with respect to such transaction, and the Company will take all steps reasonably necessary in order to insure that the Holder is given the practical opportunity to convert this Note prior to such time so as to participate in or vote with respect to such transaction; provided, however, that the failure to deliver such notice or any defect therein shall not affect the validity of the corporate action required to be described in such notice.

11.               No Fractional Shares . The Company shall not issue or cause to be issued fractional Conversion Shares on conversion of this Note. If any fraction of an Conversion Share would, except for the provisions of this Section 11 , be issuable upon conversion of this Note, the number of Conversion Shares to be issued will be rounded up to the nearest whole share.

12.               Grant of Security Interest . This Note and payments of principal and all other obligations with respect to this Note are hereby secured by all of the Purchased Assets. Elite hereby conveys to Holder a first priority security interest in all Purchased Assets as set forth in the Security Agreement.

13.               Notices . Any and all notices or other communications or deliveries hereunder (including any Conversion Notice) shall be in writing and shall be deemed given and effective on the earliest of (i) the date of transmission, if such notice or communication is delivered via facsimile at the facsimile number specified in this Section 13 prior to 5:30 p.m. (New York City time) on a Trading Day, (ii) the next Trading Day after the date of transmission, if such notice or communication is delivered via facsimile at the facsimile number specified in this Section 13 on a day that is not a Trading Day or later than 5:30 p.m. (New York City time) on any Trading Day, (iii) the Trading Day following the date of mailing, if sent by nationally recognized overnight courier service, or (iv) upon actual receipt by the party to whom such notice is required to be given. The addresses for such communications shall be: (i) if to any of the Debtors, care of Elite as set forth in the Purchase Agreement, or (ii) if to the Holder, as set forth in the Purchase Agreement.

14.               Miscellaneous .

(a)                 This Note shall be binding on and inure to the benefit of the parties hereto and their respective successors and permitted assigns. The Debtors shall not be permitted to assign this Note and the Holder shall not be permitted to assign this Note other than pursuant to Section 5 .

(b)                Subject to Section 14(a) , nothing in this Note shall be construed to give to any person or corporation other than the Debtors and the Holder any legal or equitable right, remedy or cause under this Note.

(c)                 Governing Law; Venue; Waiver Of Jury Trial . all questions concerning the construction, validity, enforcement and interpretation of this Note shall be governed by and construed and enforced in accordance with the internal laws of the state of new JERSEY, without regard to the principles of conflicts of law thereof. each party hereby irrevocably submits to the exclusive jurisdiction of the federal courts sitting in the county of ESSEX, CITY OF NEWARK AND OF THE STATE COURTS SITTING IN THE COUNTY OF BERGEN, city of HACKENSACK, for the adjudication of any dispute hereunder or in connection herewith or with any transaction contemplated hereby or discussed herein (including with respect to the enforcement of any of the transaction documents), and hereby irrevocably waives, and agrees not to assert in any suit, action or proceeding, any claim that it is not personally subject to the jurisdiction of any such court, that such suit, action or proceeding is improper. each party hereby irrevocably waives personal service of process and consents to process being served in any such suit, action or proceeding by mailing a copy thereof via registered or certified mail or overnight delivery (with evidence of delivery) to such party at the address in effect for notices to it under this agreement and agrees that such service shall constitute good and sufficient service of process and notice thereof. nothing contained herein shall be deemed to limit in any way any right to serve process in any manner permitted by law. the borrowers hereby waives all rights to a trial by jury.

(d)                The headings herein are for convenience only, do not constitute a part of this Note and shall not be deemed to limit or affect any of the provisions hereof.

(e)                 In case any one or more of the provisions of this Note shall be invalid or unenforceable in any respect, the validity and enforceability of the remaining terms and provisions of this Note shall not in any way be affected or impaired thereby and the parties will attempt in good faith to agree upon a valid and enforceable provision which shall be a commercially reasonable substitute therefor, and upon so agreeing, shall incorporate such substitute provision in this Note.

(f)                 No provision of this Note may be waived or amended except in a written instrument signed, in the case of an amendment, by the Debtors and the Holder or, or, in the case of a waiver, by the Holder. No waiver of any default with respect to any provision, condition or requirement of this Note shall be deemed to be a continuing waiver in the future or a waiver of any subsequent default or a waiver of any other provision, condition or requirement hereof, nor shall any delay or omission of either party to exercise any right hereunder in any manner impair the exercise of any such right.

(g) Each Party and its counsel have participated fully in the review and revision of this Note and the Transaction Documents. Any rule of construction to the effect that ambiguities are to be resolved against the drafting party shall not apply in interpreting this Agreement. The language in this Note and the Transaction Documents shall be interpreted as to its fair meaning and not strictly for or against any Party.

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SIGNATURE PAGE FOLLOWS]

IN WITNESS WHEREOF, the Debtors have caused this Note to be duly executed by a duly authorized officer as of the date first above indicated.

Execution Copy: August 1, 2013

Schedule 1

FORM OF CONVERSION NOTICE

(To be executed by the registered Holder
in order to convert a Convertible Note)

The undersigned hereby elects to convert the aggregate principal amount indicated below of this Note into shares of common stock, par value $0.001 per share (the “ Common Stock ”), of Elite Pharmaceuticals, Inc., a Nevada corporation (the “ Corporation ”), according to the conditions hereof, as of the date written below.

ACKNOWLEDGEMENT

The Corporation hereby acknowledges this Conversion Notice and hereby directs American Stock Transfer & Trust Company to issue the above indicated number of shares of Common Stock.

Execution Copy: August 1, 2013

Schedule 2

CONVERSION SCHEDULE

This Conversion Schedule reflects conversions of the Secured Convertible Note Due 2016 issued by Elite Pharmaceuticals, Inc. and Elite Laboratories, Inc.

Execution Copy: August 1, 2013

ANDA SECURITY AGREEMENT

THIS ABBREVIATED NEW DRUG APPLICATION SECURITY AGREEMENT (the “ Agreement ”), dated as of August 1, 2013, between Elite Laboratories, Inc., a Delaware corporation (“ Elite ”) and its parent, Elite Pharmaceuticals, Inc., a Nevada corporation (collectively, “ Debtors ”), and Mikah Pharma LLC, a limited liability company organized under the laws of the State of Delaware (" Secured Party ");

WHEREAS , Debtors and Secured Party are parties to that certain Secured Convertible Note Due 2016 of even date herewith (herein, as at any time amended, extended, restated, renewed or modified, the " Note "); and

WHEREAS , it is a condition to the willingness of Secured Party to enter into the Asset Purchase Agreement by and between Secured Party and Elite of even date (the “ Purchase Agreement ”), to sell the Purchased Assets (as defined in the Purchase Agreement) to Elite and to accept the Note as consideration under the Purchase Agreement for the Purchased Assets that Debtors enter into this ADNA Security Agreement and grant to Secured Party the security interest provided for herein; and

WHEREAS , in order to induce Secured Party to accept the Note and the debt evidenced thereby as consideration for the Purchased Assets under the Purchase Agreement, Debtors have agreed to grant to Secured Party a security interest in and to and mortgage on the Abbreviated New Drug Applications included in the Purchased Assets (collectively, the " ANDAs "). This Agreement is being executed contemporaneous with the Purchase Agreement and the Note under which Secured Party is granted a lien on and security interest in and to, the ANDAs, whereby Secured Party shall have the right to foreclose on the ANDAs in the event Secured Party alleges the occurrence of an Event of Default under the Note. Terms not defined herein shall have the meaning set forth in the Note and terms not defined herein or in the Note shall have the meaning set forth in the Purchase Agreement.

NOW, THEREFORE , in consideration of the premises, and other good and valuable consideration the sufficiency of which is hereby acknowledged, Debtors hereby agree with Secured Party as follows:

1. To secure any and all obligations of Debtors to Secured Party under the Note and Transaction Documents, including but not limited to, repayment of the obligations of Debtors under the Note, Debtors hereby convey, grant, assign, pledge, transfer, mortgage, and create in favor of Secured Party a security interest in and to and mortgage on all of Debtors’ right, title and interest in and to the Purchased Assets (as that term is defined in the Purchase Agreement), including without limitation any and all rights under any notices or agreements related thereto (collectively, the “ Collateral ”).

2. Debtors represent, covenant and warrant that:

(a) the ANDAs are subsisting;

(b) Elite is the sole and exclusive owner of the entire and unencumbered right, title and interest in and to the Collateral, free and clear of any liens, charges and encumbrances, including without limitation pledges, assignments, registered user agreements and covenants by Debtors not to sue third persons;

(c) Debtors have the unqualified right to enter into this Agreement and perform its terms; and

(d) All ANDAs on file with the Food and Drug Administration (the "FDA") were prepared in accordance with applicable law.

3. Debtors agree that, until all of the obligations under the Note shall have been satisfied in full, Debtors will not, without Secured Party's prior written consent, which consent will not be unreasonably withheld, enter into any agreement to transfer or sell any of the Collateral.

3A. Perfection of Secured Party’s Interests.

(a) Debtors agree to cooperate and join, at their expense, with Secured Party in taking such steps as are reasonably necessary, in Secured Party’s judgment, to perfect or continue the perfected status of the security interests granted hereunder, including, without limitation, the execution and delivery of any financing statements, amendments thereto and continuation statements, the delivery of chattel paper, documents or instruments to the Secured Party, the obtaining of landlords’ and mortgagees’ waivers required by Secured Party, the notation of encumbrances in favor of Secured Party on certificates of title, and the execution and filing of any collateral assignments and any other instruments reasonably requested by Secured Party to perfect its security interest in any and all of the Collateral.

(b) Secured Party may at any time and from time to time, file financing statements, continuation statements, filings with the FDA or other federal agencies, and amendments thereto, that describe the Collateral and which contain any other information required by the Uniform Commercial Code or federal law for the sufficiency or filing office acceptance of any financing statement, continuation statement, other filing, or amendment, including whether a Debtor is an organization, the type of organization and any organization identification number issued to the Debtor. Debtors agree to furnish any such information to the Secured Party promptly upon request. Any such financing statements, continuation statements, other filing or amendments may be signed by Secured Party on behalf of Debtors, and may be filed at any time in any jurisdiction, whether or not Revised Article 9 of the Uniform Commercial Code is then in effect in that jurisdiction. The foregoing grant of authority to sign and file such documents on behalf of Debtors is a power of attorney coupled with an interest and shall be irrevocable for the life of this Agreement. Secured Party, or its designee, as attorney-in-fact, will not be liable for any acts or omissions, or for any error of judgment or mistake of fact or law, except for gross negligence, or willful misconduct. This power, being coupled with an interest, is irrevocable until all obligations of Debtors to Secured Party under the Note and Transaction Documents have been indefeasibly paid in full and performed and satisfied.

(c) Debtors shall, at any time and from time to time, take such steps as Secured Party may reasonably require for Secured Party, (i) to obtain an acknowledgment, in form and substance satisfactory to the Secured Party, of any third party having possession of any of the Collateral that the third party holds such Collateral for the benefit of the Secured Party, and (ii) otherwise to insure the continued perfection and priority of Secured Party’s security interest in any of the Collateral and of the preservation of its rights therein.

4. If any Event of Default under the Note or this Agreement shall have occurred, Secured Party shall have, in addition to all other rights and remedies given it by this Agreement, those allowed by law and the rights and remedies of a Secured Party under the Uniform Commercial Code as enacted in any jurisdiction in which the ANDAs may be deemed located and, without limiting the generality of the foregoing, Secured Party may immediately, without demand of performance and without notice or demand whatsoever to Debtor, all of which are hereby expressly waived, and without advertisement, sell at public or private sale or otherwise realize upon, assign, transfer, license or otherwise dispose of, including but not limited to, transferring the ANDAs in New Jersey or elsewhere, all or from time to time any of the ANDAs, or any interest which Debtors may have therein, and after deducting from the proceeds of sale or other disposition of any and all of the ANDAs all expenses (including all expenses for broker's fees and legal services), apply the residue of such proceeds to Debtors’ obligations to Secured Party under the Note. Any remainder of the proceeds after payment in full of Debtors’ obligations owing to Secured Party under the Note and Transaction Documents including but not limited to the repayment in full of Debtors’ obligations to Secured Party under the Note shall be paid over to Debtor. Notice of any sale or other disposition of the ANDAs shall be given to Debtors at least five (5) days before the time of any intended public or private sale or other disposition of the ANDAs is to be made, which Debtors hereby agree shall be reasonable notice of such sale or other disposition. At any such sale or other disposition, Secured Party or any holder of the Note may, to the extent permissible under applicable law, purchase the whole or any part of the ANDAs free from any right of redemption on the part of Debtors, which right is hereby waived and released. Debtors waive the benefit of any marshalling doctrine with respect to Secured Party’s exercise of its rights hereunder. Debtors grant a royalty-free license to Secured Party for all patents, service marks, trademarks, trade names, copyrights, computer programs and other intellectual property and proprietary rights sufficient to permit Secured Party to exercise all rights granted to Secured Party under this Agreement.

5. At such time as Debtors shall completely satisfy all of Debtors’ obligations to Secured Party under the Note and Transaction Documents including but not limited to repayment of the obligations of Debtors under the Note, this Agreement and the Note shall terminate and Secured Party shall execute and deliver to Debtors all documents and other instruments as may be necessary or proper to terminate this Agreement and re-vest in Elite the ANDAs, subject to any disposition thereof which may have been made by Secured Party pursuant hereto.

6. Any and all fees, costs and expenses, of whatever kind or nature, including reasonable attorney's fees and legal expenses incurred by Secured Party in connection with the consummation of this transaction, the filing or recording of any documents (including all taxes in connection therewith) in public offices, the payment or discharge of any taxes, counsel fees, maintenance fees, encumbrances or otherwise protecting, maintaining or preserving the ANDAs, or in defending or prosecuting any actions or proceedings arising out of or related to the ANDAs, shall be borne and paid by Debtors on demand by Secured Party and until so paid shall become part of Debtors’ obligations under the Note. Debtors hereby agree to execute and deliver to Secured Party any and all additional documents requested by Secured Party regarding the ANDAs at any time and from time to time in its discretion to carry out and enforce the terms and conditions of this Agreement.

7. Debtors shall have the duty, through counsel acceptable to Secured Party, to complete the approval process of the ANDAs, pending as of the date of this Agreement or thereafter until all of Debtors’ obligations under the Note shall have been paid in full, to file and provide further information and documentation and to do any and all acts which are necessary or desirable to seek approval of the ANDAs and to preserve and maintain all rights to the ANDAs. Any expenses incurred in connection with the ANDAs shall be borne by Debtors. Debtors shall not abandon any ANDAs without the consent of Secured Party, which consent shall not be unreasonably withheld.

8. If Debtors breach or fail to comply with any of the terms and conditions of this Agreement or upon the occurrence of an Event of Default under the Note or any of the Transaction Documents, Debtors hereby authorize and empower Secured Party to make, constitute and appoint any officer or agent of Secured Party as Secured Party may select, in its exclusive discretion, as Debtors’ true and lawful attorney-in-fact, with the power to endorse Debtors’ name on all applications, documents, papers and instruments of every kind and nature necessary or desirable, including without limitation, for Secured Party to approve, use, own, transfer, assign, license or dispose of the ANDAs, or necessary or desirable for Secured Party to assign, pledge, convey or otherwise transfer title in or dispose of the ANDAs to Secured Party or anyone else, including without limitation any and all Forms 356H, and/or such other forms as the FDA shall require. Debtors hereby ratify all that such attorney shall lawfully do or cause to be done by virtue hereof. This power of attorney shall be irrevocable for the life of this Agreement. Secured Party, or its designee, as attorney-in-fact, will not be liable for any acts or omissions, or for any error of judgment or mistake of fact or law, except for gross negligence, or willful misconduct. This power, being coupled with an interest, is irrevocable until all obligations of Debtors to Secured Party under the Note and Transaction Documents have been indefeasibly paid in full and performed and satisfied.

9. If Debtors fail to comply with any of their obligations hereunder, Secured Party may do so in Debtors’ name or in Secured Party's name, but at Debtors’ expense, and Debtors hereby agree to reimburse Secured Party in full for all expenses, including reasonable attorney's fees, incurred by Secured Party in approving, protecting, defending and maintaining the ANDAs.

10. No course of dealing between Debtors and Secured Party, nor any failure to exercise, nor any delay in exercising, on the part of Secured Party, any right power or privilege hereunder or under the Note shall operate as a waiver thereof; nor shall any single or partial exercise of any right, power or privilege hereunder or thereunder preclude any other or further exercise thereof or the exercise of any other right, power or privilege.

11. All of Secured Party's rights and remedies with respect to the ANDAs, whether established hereby or by the Note or the other Transaction Documents, or by any other agreements or by law shall be cumulative and may be exercised singularly or concurrently.

12. The provisions of this Agreement are severable, and if any clause or provision shall be held invalid and unenforceable in whole or in part in any jurisdiction, then such invalidity or unenforceability shall affect only such clause or provision, or part thereof, in such jurisdiction, and shall not in any manner affect such clause or provision in any other jurisdiction, or any other clause or provision of this Agreement in any jurisdiction.

13. This Agreement is subject to modification only by a writing signed by the parties.

14. The benefits and burdens of this Agreement shall inure to the benefit of and be binding upon the respective successors and permitted assigns of the parties.

15. The validity and interpretation of this Agreement and the rights and obligations of the parties shall be governed by the laws of the State of New Jersey.

16. The provisions of Sections 13 and 14 the Note are hereby incorporated by reference into this Agreement. To the extent that there is a conflict between the provisions of this Agreement and Sections 13 and 14 of the Note, the provisions of this Agreement shall govern.

[Signature Page follows]

Execution Copy: August 1, 2013

IN WITNESS WHEREOF, this ANDA Security Agreement is execution hereof as of the day and year first above written.

EXECUTION COPY; August 1, 2013

EMPLOYMENT AGREEMENT

This agreement (“ Agreement ”) is made on August 1, 2013, by and between Elite Pharmaceuticals, Inc., a Nevada corporation (“ Company ”), and Nasrat Hakim (“Executive”).

WHEREAS, Company desires Executive to be Company President and Chief Executive Officer (“CEO”) and Executive desires to provide employment services to Company in such a capacity and in accordance with the terms of this Agreement.

In consideration of the mutual promises and considerations herein contained, the parties hereby agree as follows:

A G R E E M E N T:

1. Employment .

1.1 Company hereby employs Executive in the capacity of President & CEO reporting to the Board of Directors (the “ Board ”) effective August 2, 2013. Executive hereby accepts such employment, subject to the terms herein contained. In such capacity Executive (a) shall perform such functions and duties as are required in the Company’s Bylaws and (b) shall report to and receive direction from the Board (the “Duties”). Executive shall devote such time and effort to his Duties as are reasonably necessary for him to perform such Duties in a competent and professional manner.

2. Compensation and Benefits .

2.1. Salary . During the Term (as defined below), Company shall pay to Executive a base salary at the annual rate of Three Hundred Fifty Thousand Dollars ($350,000) (the “ Salary ”). The Salary shall be paid in shares of Company’s Common Stock (“ Stock ”) pursuant to the Company’s current procedures for paying Company executives in Stock (i.e., with regards to the method of computing the number of Shares to be issued and the timing of such issuances, provided the timing is no later than March 15 ^th following the end of the calendar year for which payment is being made). Notwithstanding the foregoing, the payment of such Shares shall be made in a manner that does not violate Section 409A of the Internal Revenue Code of 1986, as amended (“ Section 409A ”) as discussed in Section 3.2.8 below.

2.2. Bonuses .

2.2.1 Annual Bonus . Executive shall be entitled to an annual bonus equal to 100% of Executive’s annual salary (“ Annual Bonus ”). The Annual Bonus shall be paid in Stock in accordance with the same methods utilized in Section 2.1 above. The Annual Bonus shall be paid on or before March 15 ^th following the end of the calendar year for which payment is being made. During the Term, the Board shall set up specific milestones to be achieved within each calendar year (“ Annual Milestones ”) and the amount of the Annual Bonus shall be payable upon the achievement of such Annual Milestones.

2.2.2 Discretionary Bonuses . In addition to the Annual Bonus, the Board may award discretionary bonuses from time to time.

8K 2013 8 5 Exhibit 10 4 Hakim Employment Agreement.DOC

2.3. Executive Benefits .

2.3.1. Expenses . Company shall promptly reimburse Executive for all reasonable and documented travel, entertainment and other business expenses actually and properly incurred by him in relation to Company’s business. No such expense reimbursement shall be allowed with regard to such expenses that exceed $10,000 unless such expenses have been pre-approved by Company in writing. Such expense reimbursement shall include reasonable hotel accommodations and/or housing incurred by Executive specifically related to his duties under this Agreement against receipts or other appropriate written evidence of such expenditures as required by the appropriate Internal Revenue Service regulations or by Company.

2.3.2. Company Plans . Executive shall be entitled to participate in such employee benefit plans and programs as Company may from time to time generally offer or provide to senior executive officers of Company, including medical and retirement plans. Nothing in the foregoing shall limit or restrict Company’s discretion to amend, revise or terminate any benefit or plan without notice to or consent of Executive.

2.3.3. Vacation . Executive shall be entitled to four (4) weeks of paid vacation per Fiscal Year, pro rated for periods of less than a full Fiscal Year.

2.3.4. Automobile Allowance . During the Term, Company shall reimburse Executive One Thousand Five Hundred Dollars ($1,500) per month for automobile expenses and/or car lease.

3. Employment Term; Termination .

3.1. Employment Term . Executive’s employment hereunder shall commence on August 1, 2013 (the “ Commencement Date ”).

3.2. Events of Termination . Executive’s employment may be terminated as follows:

3.2.1 Termination for Cause . This Agreement may be terminated by Company for Cause. For purposes of this Agreement, “ Cause ” justifying the termination of this Agreement by Company is defined as: (1) failure or refusal to perform the services required hereunder; (2) a material breach by Executive of any of the terms of this Agreement; or (3) Executive’s conviction of a crime that either results in imprisonment or involves embezzlement, dishonesty, or activities injurious to Company or its reputation. Following termination pursuant to this subsection, Company’s only obligation to Executive shall be to pay to Executive all accrued Annual Salary and all accrued vacation time (both payable in Stock computed in the same manner as set forth in Section 2.1) and any reasonable and necessary business expenses incurred by Executive in connection with his duties, all to the Date of Termination and payable in a lump sum, less applicable deductions and withholdings, as soon as administratively practicable following Executive’s termination, but in no event later than March 15 ^th following the end of the calendar year in which such termination occurs. Notwithstanding the foregoing, any expense reimbursement will take place no later than the time required under Section 409A.

3.2.2 Disability . This Agreement may be terminated by Company upon at least thirty (30) days’ written notice if Executive is prevented by illness, accident or other disability (mental or physical) from performing the essential functions of the position for one or more periods cumulatively totaling three (3) months during any consecutive twelve (12) month period. In the event this Agreement is terminated pursuant to this subsection, Company shall pay to Executive all accrued Salary, pro rata Annual Bonus, and all accrued vacation time (all payable in Stock computed in the same manner as set forth in Section 2.1) and any reasonable and necessary business expenses incurred by Executive in connection with his duties, all to the Date of Termination and payable in a lump sum, less applicable deductions and withholdings. In addition, Company shall pay to Executive severance payments in an amount equal to one (1) year of Executive’s Salary, payable in Stock computed in the same manner as set forth in Section 2.1 and payable in a lump sum, less applicable deductions and withholdings, as soon as administratively practicable (but in no event later than 60 days) following Executive’s termination, but in no event later than March 15 ^th following the end of the calendar year in which such termination occurs (“ Disability Severance Payments ”). Disability Severance Payments made by Company to Executive pursuant to this Section 3.2.2 are conditioned on the Executive signing a Confidential Severance Agreement and Release. Notwithstanding the foregoing, any expense reimbursement will take place no later than the time required under Section 409A

3.2.4 Death . This Agreement shall be automatically terminated in the event of Executive’s death during the Term of employment. In the event this Agreement terminates upon Executive’s death, Company shall pay Executive’s estate or beneficiary, as applicable, all accrued Salary, pro rated Annual Bonus and all accrued vacation time (both payable in Stock computed in the same manner as set forth in Section 2.1) and any reasonable and necessary business expenses incurred by Executive in connection with his duties, all to the Date of Termination and all payable in a lump sum, less applicable deductions and withholdings, as soon as administratively practicable (but in no event later than 60 days) following Executive’s termination, but in no event later than March 15 ^th following the end of the calendar year in which such termination occurs.

3.2.5 Without Cause . This Agreement may be terminated by Company without Cause by giving Executive notice at least thirty (30) days prior to the effective date (“ Date of Termination ”); provided that Company pays Executive each of the following:

(i) Company shall pay Executive severance payments, payable in Stock computed in the same manner as set forth in Section 2.1 (the “ Severance Payments ”) in an amount equal to two (2) years’ Salary at the rate in effect upon the Date of Termination , less applicable deductions and withholdings , as soon as administratively practicable (but in no event later than 60 days) following Executive’s termination, but in no event later than March 15 ^th following the end of the calendar year in which such termination occurs. In addition, Company shall pay to Executive all accrued Salary, prorated Annual Bonus and all accrued vacation time (both payable in Stock computed in the same manner as set forth in Section 2.1) and any reasonable and necessary business expenses incurred by Executive in connection with his duties, all to the Date of Termination and payable in a lump sum , less applicable deductions and withholdings , as soon as administratively practicable (but in no event later than 60 days) following Executive’s termination, but in no event later than March 15 ^th following the end of the calendar year in which such termination occurs.

(ii) If the Company has a health insurance plan for its employees and Executive is covered under such plan, provided that Executive timely elects continuation coverage under the Consolidated Omnibus Budget Reconciliation Act of 1985, as amended (“ COBRA ”), Company shall pay, on Executive’s behalf, the portion of premiums of Executive’s group health insurance, including coverage for Executive’s eligible dependents, that Company paid immediately prior to Executive’s separation of employment with Company (“ COBRA Payments ”) for a period of twelve (12) months following the Date of Termination (“ COBRA Period ”). Company will pay such COBRA Payments for Executive’s eligible dependents only for coverage for which those dependents were enrolled immediately prior to the date of Executive’s separation of employment. Executive will continue to be required to pay that portion of the premium of Executive’s health coverage, including coverage for Executive’s eligible dependents, that Executive was required to pay as an active employee immediately prior to the date of Executive’s separation of employment. For the balance of the period that Executive is entitled to coverage under COBRA after the COBRA Period, if any, Executive shall be entitled to maintain coverage for Executive and Executive’s eligible dependents at Executive’s sole expense.

(iii) The Severance Payments and the COBRA Payments (if any) shall be paid so long as Executive is not in breach of any term of this Agreement, including, without limitation, Sections 4, 5, 6, 7 and 8. The Severance Payments and COBRA Payments (if any) made by Company to, or on behalf of, Executive are conditioned on the Executive signing a Severance Agreement and Release.

3.2.6 Resignation . This Agreement may be terminated by Executive for any reason or no reason at all by giving notice to Company of Executive’s resignation at least sixty (60) days prior to the effective resignation date. Following termination pursuant to this subsection 3.2.6, Company’s only obligation to Executive shall be to pay to Executive all accrued Salary and all accrued vacation time (both payable in Stock computed in the same manner as set forth in Section 2.1) and any reasonable and necessary business expenses incurred by Executive in connection with his duties, all to the Date of Termination and payable in a lump sum, less applicable deductions and withholdings no later than March 15 ^th following the end of the calendar year in which such termination occurs.

3.2.7. Termination Upon Change of Control . Upon “Change of Control” as defined in section 3.3.1, Executive is entitled to a payment in an amount equal to two (2) years Annual Salary in effect upon the Date of Termination , less applicable deductions and withholdings , payable in Stock computed in the same manner as set forth in Section 2.1 as soon as administratively practicable (but in no event later than 60 days) following Executive’s termination, but in no event later than March 15 ^th following the end of the calendar year in which such termination occurs. Executive also shall be entitled to a continuation of his Executive benefits for a period of (2) two years from the Date of Termination. In addition, Company shall pay to Executive all accrued Annual Salary, pro rated Annual Bonus and all accrued vacation time (both payable in Stock computed in the same manner as set forth in Section 2.1) and any reasonable and necessary business expenses incurred by Executive in connection with his duties, all to the Date of Termination and payable in a lump sum , less applicable deductions and withholdings , as soon as administratively practicable (but in no event later than 60 days) following Executive’s termination, but in no event later than March 15 ^th following the end of the calendar year in which such termination occurs. In addition any securities of the Company owned by Executive and subject to vesting schedules shall immediately vest.

3.2.8 Section 409A Compliance .

(i) All in-kind benefits provided and expenses eligible for reimbursement under this Agreement shall be provided by the Company or incurred by the Executive during the time periods set forth in this Agreement. All reimbursements shall be paid as soon as administratively practicable, but in no event shall any reimbursement be paid after the last day of the taxable year following the taxable year in which the expense was incurred. The amount of in-kind benefits provided or reimbursable expenses incurred in one taxable year shall not affect the in-kind benefits to be provided or the expenses eligible for reimbursement in any other taxable year. Such right to reimbursement or in-kind benefits is not subject to liquidation or exchange for another benefit.

(ii) To the extent that any of the payments or benefits provided for in Section 3 are deemed to constitute non-qualified deferred compensation benefits subject to Section 409A of Code, the following interpretations apply: (A) Any termination of the Executive’s employment triggering payment of benefits under Section 3 must constitute a “separation from service” under Section 409A(a)(2)(A)(i) of the Code and Treas. Reg. §1.409A-1(h) before distribution of such benefits can commence. To the extent that the termination of the Executive’s employment does not constitute a separation of service under Section 409A(a)(2)(A)(i) of the Code and Treas. Reg. §1.409A-1(h) (as the result of further services that are reasonably anticipated to be provided by the Executive to the Company or any of its affiliates, at the time the Executive’s employment terminates), any benefits payable under Section 3 that constitute deferred compensation under Section 409A of the Code shall be delayed until after the date of a subsequent event constituting a separation of service under Section 409A(a)(2)(A)(i) of the Code and Treas. Reg. §1.409A-1(h). For purposes of clarification, this Section 3.2.8(ii) shall not cause any forfeiture of benefits on the Executive’s part, but shall only act as a delay until such time as a “separation from service” occurs. (B) If the Executive is a “specified employee” (as that term is used in Section 409A of the Code and regulations and other guidance issued thereunder) on the date his separation from service becomes effective, any benefits payable under Section 3 that constitute non-qualified deferred compensation under Section 409A of the Code shall be delayed until the earlier of (1) the business day following the six-month anniversary of the date his separation from service becomes effective, and (2) the date of the Executive’s death, but only to the extent necessary to avoid such penalties under Section 409A of the Code. On the earlier of (3) the business day following the six-month anniversary of the date his separation from service becomes effective, and (4) the Executive’s death, the Company shall pay the Executive in a lump sum the aggregate value of the non-qualified deferred compensation that the Company otherwise would have paid the Executive prior to that date under Section 5(b) of this Agreement. (C) It is intended that each installment of the payments and benefits provided under Section 3 shall be treated as a separate “payment” for purposes of Section 409A of the Code; and neither the Company nor the Executive shall have the right to accelerate or defer the delivery of any such payments or benefits except to the extent specifically permitted or required by Section 409A of the Code.

(iii) It is the intention of the parties that payments or benefits payable under this Agreement not be subject to the additional tax imposed pursuant to Section 409A of the Code. To the extent such potential payments or benefits could become subject to such Section, the parties shall cooperate to amend this Agreement with the goal of giving Executive the economic benefits described herein in a manner that does not result in such tax being imposed.

3.2.9. Termination of Employment . This Agreement shall terminate simultaneously with the termination of Executive’s employment for any reason; provided , that the covenants set forth in Sections 3, 4, 5, 6, 7 and 8 of this Agreement shall survive the termination of this Agreement to the extent provided in such Sections.

3.3. Definitions .

3.3.1. “Change of Control” Defined . The term “ Change of Control ” shall mean (a) the acquisition of Company pursuant to a consolidation of Company with, or merger of Company with or into, any other Person with the result of which the holders of Company’s voting stock immediately prior to such transaction hold less than fifty (50%) percent of the combined voting power after giving effect to such transaction; (b) the sale of all or substantially all of the assets or capital stock of Company to any other Person; or (c) securities of Company representing greater than fifty (50%) percent of the combined voting power of Company’s then outstanding voting securities are acquired by a Person, or group of related Persons, in a single transaction or series of related transactions.

3.3.2. “Notice of Termination” Defined . “ Notice of Termination ” means a written notice that indicates the specific termination provision relied upon by Company or Executive.

3.3.3. “Date of Termination” Defined . “ Date of Termination ” means such date as Executive’s employment expires as written in the Notice of Termination.

4. Conflicts of Interest . Company and Executive acknowledge that Executive is the owner, President and CEO of Mikah Pharma LLC (“Mikah”). Company and Executive will sign a separate agreement concluding any potential conflict to the satisfaction of both parties and Executive agrees to comply with such agreement.

5. Proprietary Information .

5.1 Executive represents and warrants to Company that (i) Executive is not subject to any limitation or agreement restricting employment by Company or performance of Executive’s Duties hereunder, and (ii) neither Executive nor any third party has any right or claim to Executive’s work produced on behalf of Company or using the property, personnel, or facilities of Company. Executive shall not misappropriate proprietary rights of Company or any third party.

5.2 Executive further agrees not to make, use, disclose to any third party, or permit to be made, used, or disclosed, any records, plans, papers, articles, notes, memoranda, reports, lists, records, drawings, sketches, specifications, software programs, data, or other materials of any nature relating to any matter within the scope of the business of Company or concerning any of its dealings or affairs (“ Materials ”), whether or not developed, in whole or in part, by Executive and whether or not embodying Confidential Information (defined below), otherwise than for the benefit of Company. Executive shall not, on and after the Date of Termination, use, disclose, or permit to be used or disclosed, any such Materials, it being agreed that all such Materials shall be and remain the sole and exclusive property of Company. Immediately upon the Date of Termination, Executive shall deliver all such Materials, and all copies thereof, to Company, at its designated office.

6. Non-Competition; Non-Solicitation; Anti-Raiding; Non-Disparagement . Without the prior written approval of the Board, Executive shall not, directly or indirectly, during his employment and until the end of one (1) year after the Date of Termination (however such termination occurs, including, without limitation, termination pursuant to Section 3.2):

6.1 Solicit, offer employment to, otherwise attempt to hire, or assist in the hiring of any employee or officer of Company or any of its Affiliates; (ii) encourage, induce, assist or assist others in inducing any such person to terminate his or her employment with Company or any of its Affiliates; or (iii) in any way interfere with the relationship between Company or any of its Affiliates and their employees; or

6.2 Make any public statement or perform or do any other act prejudicial or injurious to the reputation or goodwill of Company or any of its Affiliates or otherwise interfere with the business of Company or any of its Affiliates.

6.3 Notwithstanding anything to the Contrary in Subsection 6.1, Mikah shall have the right to continue the business previously established for the Morphine Sulfate ODT and Trimipramine, products including manufacturing and/or sales of the product through third party contracts.

7. Confidentiality .

7.1 The term “Confidential Information” shall include, but not be limited to confidential information and the workpapers, concepts, formulas, techniques, strategies, components, programs, reports, studies, memoranda, correspondence, materials, manuals, records, data, technology, financial information, products, plans, research, service, design information, procedures, methods, documentation, policies, pricing, billing, customer lists and leads, and any other technical data, information and know-how which relates to products or customers or potential customers or suppliers or potential suppliers or are otherwise useful in the parties' businesses, and which one of the parties considers proprietary and desires to maintain confidential. Confidential Information is entitled to protection hereunder whether or not such information is oral or written, whether or not such information is identified as such by an appropriate stamp or marking on each document provided or, if orally first provided, identified at that time as proprietary or confidential. In addition, Confidential Information shall include information developed by the Executive in the performance of his Duties under this Agreement. All such Confidential Information is extremely valuable and is intended to be kept secret to Company; is the sole and exclusive property of Company or its Affiliates; and, is subject to the restrictive covenants set forth herein. The term Confidential Information shall not include any information generally available to the public or publicly disclosed by Company (other than by the act or omission of Executive), information disclosed to Executive by a third party under no duty of confidentiality to Company or its Affiliates, information that Executive can demonstrate was in his possession prior to the date of this Agreement or Executive can demonstrate was independently developed by him without the use or assistance of Confidential Information, or information required by law or court order to be disclosed by Executive.

7.2 Executive shall not, without Company’s prior written approval, use, disclose, or reveal to any person or entity any of Company’s Confidential Information, except as required in the ordinary course of performing duties hereunder. Executive shall not use or attempt to use any Confidential Information in any manner which has the possibility of injuring or causing loss, whether directly or indirectly, to Company or any of its Affiliates.

7.3 In the event that Executive’s employment with Company is terminated for any reason whatsoever, he shall return to Company, promptly upon Company’s written request therefore, any documents, photographs, tapes, discs, memory devices, and other property containing Confidential Information which were received by him during his employment, without retaining copies thereof.

8 Assignment of Intellectual Property .

8.1. Executive shall promptly disclose to Company any and all Inventions (as defined below). Executive shall promptly communicate to Company all information, details and data pertaining to any Inventions in such form as Company requests. Executive agrees that Inventions, patents and patent applications are the property of Company, and any and all rights, titles or interests in and to Inventions, patents or patent applications which Executive may have in any and every jurisdiction are hereby assigned in full. Whenever Executive is requested to do so by Company, during or after the Term, Executive shall, at the Company’s sole cost and expense, promptly execute and deliver any and all applications, assignments or other documents or instruments reasonably deemed necessary or advisable by Company to apply for and obtain Letters Patent of the United States or any foreign country or to otherwise protect, confirm or establish Company’s full and exclusive interests in any Inventions. The obligations set forth in this Section 8.1 shall be binding upon the successors, assigns, executors, administrators and other legal representatives of Executive.

8.2 Any and all Works for Hire (as defined below) shall be considered “works made for hire” under the copyright laws of the United States or property of Company under applicable federal, state, local and foreign trademark laws (as appropriate). Executive shall promptly communicate to Company any and all Works for Hire, and any and all information, details and data pertaining to any Works for Hire, in such form as Company requests. To the extent that Works for Hire fail to qualify as (A) “works made for hire” under the copyright laws of the United States or any other jurisdiction or (B) property of Company under applicable federal, state, local or foreign trademark laws, Executive hereby assigns each Work for Hire and all right, title and interest therein in any and every jurisdiction to Company. Whenever Executive is requested to do so by Company, during or after the Term, Executive shall, at the Company’s sole cost and expense, promptly execute and deliver any and all applications, assignments or other documents or instruments reasonably deemed necessary or advisable by Company to apply for and confirm and effectuate full and exclusive ownership of Works for Hire in Company, including, but not limited to, ownership of any moral rights under the copyright law of any nation, or any other rights under the intellectual property laws of any nation. The obligations set forth in this Section 8.2 shall be binding upon the successors, assigns, executors, administrators and other legal representatives of Executive.

8.3 If a court declares that any term or provision of this Section 8 is invalid or unenforceable, the parties to this Agreement agree that the court making the determination of invalidity or unenforceability shall have the power to reduce the scope, duration or area of the term or provision, to delete specific words or phrases, or to replace any invalid or unenforceable term or provision with a term or provision that is valid and enforceable and that comes closest to expressing the intention of the invalid or unenforceable term or provision, and this Agreement shall be enforceable as so modified.

8.4 Definitions .

8.4.1 “Inventions” Defined . “ Inventions ” means any and all inventions, discoveries, improvements, patent, copyrights and/or other property rights, whether or not patented or patentable made, conceived, created, developed or contributed to by Executive during the Term which are (i) directly or indirectly related to the business, operations or activities of the Company or any of its subsidiaries or affiliates, (ii) directly or indirectly related to Executive’s employment by, or performance of other services (including as a director, manager, officer, advisor, agent, representative, consultant or other independent contractor) for, the Company or any of its Affiliates, or (iii) based upon Confidential Information.

8.4.2 “Work for Hire” Defined . “ Work for Hir e” means any and all sales approaches, sales material, training material, computer software, documentation, other copyrightable works or any other intellectual property (including, but not limited to, materials or services subject to trademark or service mark registration, but excluding Inventions) made, conceived, created, developed or contributed to by Executive during the Term and which are (i) directly or indirectly related to the business, operations or activities of the Company or any of its Affiliates, (ii) directly or indirectly related to Executive’s employment by, or performance of other services (including as a director, manager, officer, advisor, agent, representative, consultant or other independent contractor) for, the Company or any of its Affiliates, or (iii) based upon Confidential Information.

9. Acknowledgments; Equitable Remedies . Executive acknowledges that the covenants contained in Sections 4, 5, 6, 7 and 8, including those related to duration, geographic scope, and the scope of prohibited conduct, are reasonable and necessary to protect the legitimate interests of Company. He further acknowledges that the covenants contained in Sections 4, 5, 6, 7 and 8 are designed, intended, and necessary to protect, and are reasonably related to the protection of, Company’s proprietary information, to which he will be exposed and with which he will be entrusted. Specifically, without limitation, Executive is entrusted with trade secrets regarding: Inventions, the strategic planning initiatives; business development plans; budgets; financial information; management training; future business plans; and operational strategies and procedures. Executive understands that any breach of Sections 5 or 7 will also constitute a misappropriation of Company’s proprietary rights, and may constitute a theft of Company’s trade secrets under applicable local, state, and federal statutes, and will result in a claim for injunctive relief, damages, and/or criminal sanctions and penalties against Executive by Company, and possibly others. Executive acknowledges that any breach of Sections 4, 5, 6, 7 or 8 will cause Company immediate and irreparable injury and damage, for which monetary relief would be inadequate or difficult to quantify. Company will be entitled to, in addition to all other remedies available to it, injunctive relief and specific performance to prevent a breach and to secure the enforcement of Sections 4, 5, 6, 7 or 8. Executive further acknowledges that the covenants set forth in Sections 4, 5, 6, 7 and 8 shall survive the Date of Termination in accordance with their terms

10. Miscellaneous Provisions .

10.1 Severability . If, in any jurisdiction, any term or provision hereof is determined to be invalid or unenforceable, (a) the remaining terms and provisions hereof shall be unimpaired; (b) any such invalidity or unenforceability in any jurisdiction shall not invalidate or render unenforceable such term or provision in any other jurisdiction; and (c) the invalid or unenforceable term or provision shall, for purposes of such jurisdiction, be deemed replaced by a term or provision that is valid and enforceable and that comes closest to expressing the intention of the invalid or unenforceable term or provision.

10.2 Execution in Counterparts . This Agreement may be executed in one or more counterparts, and by the two parties hereto in separate counterparts, each of which shall be deemed to be an original and all of which taken together shall constitute one and the same agreement (and all signatures need not appear on any one counterpart), and this Agreement shall become effective when one or more counterparts has been signed by each of the parties hereto and delivered to each of the other parties hereto. This Agreement, once executed by a Party, may be delivered to the other Party hereto by facsimile or electronic transmission of a copy of this Agreement bearing the signature of the Party so delivering this Agreement. A faxed or electronically delivered signature shall have the same legally binding effect as an original signature.

10.3. Notices . All notices, requests, demands and other communications hereunder shall be in writing and shall be deemed duly given upon receipt when delivered by hand, overnight delivery or facsimile (with confirmed delivery), or three (3) business days after posting, when delivered by registered or certified mail or private courier service, postage prepaid, return receipt requested, as follows:

or to such other address(es) as a party hereto shall have designated by like notice to the other parties hereto.

10.4. Amendment . No provision of this Agreement may be modified, amended, waived or discharged in any manner except by a written instrument executed by both Company and Executive.

10.5. Entire Agreement . Except as specifically provided herein, this Agreement constitutes the entire agreement of the parties hereto with respect to the subject matter hereof, and supersedes all prior agreements and understandings of the parties hereto, oral or written. Company and Executive shall execute and deliver all such further documents as may be necessary to carry out the intent of the preceding sentence.

10.6. Applicable Law . This Agreement shall be governed by and construed in accordance with the laws of the State of New Jersey applicable to contracts made and to be wholly performed therein.

10.7. Headings . The headings contained herein are for the sole purpose of convenience of reference, and shall not in any way limit or affect the meaning or interpretation of any of the terms or provisions of this Agreement.

10.8. Binding Effect; Successors and Assigns . Executive may not delegate any of his duties or assign any of his rights hereunder. This Agreement shall inure to the benefit of, and be binding upon, the parties hereto and their respective heirs, legal representatives and beneficiaries, successors and permitted assigns. Company shall require any successor (whether direct or indirect and whether by purchase, merger, consolidation or otherwise) to all or substantially all of the business and/or assets of Company, by an agreement in form and substance reasonably satisfactory to Executive, to expressly assume and agree to perform this Agreement in the same manner and to the same extent that Company would be required to perform if no such succession had taken place.

10.9. Waiver . The failure of either of the parties hereto to at any time enforce any of the provisions of this Agreement shall not be deemed or construed to be a waiver of any such provision , nor to in any way affect the validity of this Agreement or any provision hereof or the right of either of the parties hereto thereafter to enforce each and every provision of this Agreement. No waiver of any breach of any of the provisions of this Agreement shall be construed or deemed to be a waiver of any other or subsequent breach.

10.10. Capacity, etc. Each of Executive and Company hereby represents and warrants to the other that, as the case may be: (a) he or it has full power, authority and capacity to execute and deliver this Agreement and to perform his or its obligations hereunder; (b) such execution, delivery and performance shall not (and with the giving of notice or lapse of time or both would not) result in the breach of any agreements or other obligations to which he or it is a party or he or it is otherwise bound or violate any law; and (c) this Agreement is his or its valid and binding obligation enforceable in accordance with its terms.

10.11. Enforcement; Jurisdiction . If any party institutes legal action to enforce or interpret the terms and conditions of this Agreement, the prevailing party shall be awarded reasonable attorneys’ fees at all trial and appellate levels and the expenses and costs incurred by such prevailing party in connection therewith. Any legal action, suit or proceeding, in equity or at law, arising out of or relating to this Agreement shall be instituted exclusively in the State or Federal courts located in the State of New Jersey and each party agrees not to assert, by way of motion, as a defense or otherwise, in any such action, suit or proceeding, any claim that such party is not subject personally to the jurisdiction of any such court, that the action, suit or proceeding is brought in an inconvenient forum, that the venue of the action, suit or proceeding is improper or should be transferred, or that this Agreement or the subject matter hereof may not be enforced in or by any such court. Each party further irrevocably submits to the jurisdiction of any such court in any such action, suit or proceeding. Any and all service of process and any other notice in any such action, suit or proceeding shall be effective against any party if given personally or by registered or certified mail, return receipt requested or by any other means of mail that requires a signed receipt, postage prepaid, mailed to such party as herein provided. Nothing herein contained shall be deemed to affect or limit the right of any party to serve process in any other manner permitted by applicable law.

10.12. Advice of Counsel . Executive represents and warrants that he has had full opportunity to seek advice and representation by independent counsel of his own choosing in connection with the interpretation, negotiation and execution of this Agreement.

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IN WITNESS WHEREOF, this Agreement has been executed and delivered by the parties hereto as of the date first above written.